ABEV

Business Context and Reporting Period

Company: AMBEV S.A.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter (2Q) and First Half (HY) ended June 30, 2025.
Context: Ambev reported solid financial results for the first half of 2025, driven by revenue management strategies and premiumization. The company faced industry softness, particularly in Brazil due to unfavorable weather conditions, but maintained top-line resilience through price increases and brand strength.

Key Financial Metrics (2Q25 vs. 2Q24)

Note: All figures in Brazilian Reais (R$). Organic growth excludes currency translation and scope changes.

Material Changes vs. Prior Period

• Volume Decline: Consolidated organic volumes decreased by 4.5% in 2Q25. Brazil Beer volumes fell 8.9% due to colder temperatures and industry softness, while Brazil NAB volumes grew slightly (+0.2%).
• Revenue Resilience: Despite volume declines, Net Revenue grew organically by 3.4%, driven by an 8.4% increase in Net Revenue per hectoliter (NR/hl) via revenue management and premiumization.
• Margin Expansion: Normalized EBITDA margin expanded by 110 basis points to 30.6%, supported by effective cost management despite an 8.9% increase in Cash COGS/hl driven by FX and commodity headwinds (specifically aluminum).
• Profit Growth: Normalized Profit rose 15.2% to R$ 2,832.7 million, aided by EBITDA growth and a lower effective tax rate (18.4%), partially offset by higher net financial expenses.
• Regional Performance:
  • Brazil: Beer volumes declined significantly; NAB outperformed the industry.
  • Latin America South (LAS): Strongest performer with 23.3% organic revenue growth and 42.8% EBITDA growth, led by Argentina and Bolivia.
  • Central America & Caribbean (CAC): Volumes declined 4.4%, but EBITDA grew 5.9% due to margin expansion.
  • Canada: Volumes grew 0.8% and revenue grew 2.9%, outperforming the local industry.

Guidance, Outlook, and Risks

• Capital Allocation: The Board approved intermediary dividends of approximately R$ 2.0 billion to be paid in October 2025.
• Outlook: Management expects to manage anticipated FX and commodity headwinds in the second half of 2025 through disciplined revenue and cost management. The company remains confident in delivering growth and value creation.
• Strategic Focus: Continued investment in brand equity (e.g., FIFA Club World Cup, Roland-Garros), digital transformation (BEES Marketplace, Zé Delivery), and premiumization.
• Risks & Contingencies:
  • Hyperinflation Accounting: Argentina operations are subject to IAS 29 adjustments. A cap of 2% monthly price growth (26.8% YoY) was applied to Argentina for organic growth calculations in HY25.
  • FX and Commodities: Significant exposure to foreign exchange fluctuations (USD/BRL) and commodity prices (aluminum, packaging).
  • Weather: Unfavorable weather conditions in key markets (Brazil, Canada) negatively impacted consumption occasions.

Investor Verification Checklist

• Argentina Adjustments: Verify the impact of the new 2% monthly price growth cap on Argentina's organic revenue and EBITDA calculations under IAS 29.
• Working Capital: Confirm the sustainability of the 9.2% decline in operating cash flow, which was primarily driven by lower payables due to volume declines.
• Cost Headwinds: Monitor the trajectory of Cash COGS/hl, which rose 8.9% in 2Q25, to assess if margin expansion can be maintained in 2H25.
• Market Share: Review Nielsen sell-out data to validate management's claim of low-single-digit market share headwinds in Brazil Beer offset by premium portfolio strength.
• Dividend Payout: Confirm the payment of the R$ 2.0 billion intermediary dividend in October 2025 and its impact on liquidity.