THE ambev (ABEV3) presented results that will likely contribute to further increase investor sentiment towards the company’s shares in the coming months, says the Bradesco BBIin a report published this Thursday (28) by Agora Investments.
BBI has a positive balance sheet reading, with adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) of R$4.6 billion, slightly above expectations.
The brewery also managed to expand its net revenue by 14.5% year-on-year, to approximately R$18 billion. The result was driven by the operations of Ambev in Brazilwith revenue up 23% due to higher volumes.
Consolidated profit increased by 4.6% year-on-year, to R$3.06 billion, and was above expectations.
Ambev shares have a day of volatility this Thursday. Around 11:20 am, the shares fell 0.87%, quoted at R$14.85 each.
balance sheet highlight
For BBI, the positive highlight of Ambev’s results was the 8.5% year-on-year increase in beer volumes in Brazil.
“This volume result is likely due to the company continuing to execute its growth strategy well (e.g. innovations) and taking advantage of a favorable competitive environment that is likely to continue (e.g. Heineken may face capacity constraints until mid-2019). 2024, when it should open a new plant and, therefore, is focused on increasing prices)”, comment analysts Leandro Fontanesi and Ricardo França.
THE XP Investimentos highlights that there was a “consistent” and above-inflation increase in net revenue/hectoliter, of 13% year-on-year, driven by the recovery in out-of-home consumption along with the growth of premium brands by more than 20%.
“While gross margin was down 120 basis points (still 120 basis points above our estimates) due to headwinds from commodity prices, SG&A expenses were lower than our projections and Ebitda margin adjusted EBITDA increased by 80 basis points, to 22.4%, translating into a sharp increase in adjusted Ebitda of 27% year-on-year”, say Leonardo Alencar and Pedro Fonseca, from the agro, food and beverage sector analysis team at broker.
XP has a buy recommendation for Ambev, with a target price of BRL 18.80 for the end of 2022.
pressure on costs
Genial Investimentos received Ambev’s results with caution. Although it understands that the numbers indicate that consumption is better, the broker still sees a challenging scenario for the company, with pressure coming from inflation, interest and prices of commodities.
According to the broker, Ambev will still have difficulties in improving its profitability.
“Even with advances in the company’s main lines, we also saw a large increase in the cost of goods sold (COGS): an 18% increase year on year, reaching R$ 9.3 billion”, he highlights.
Genial has a “sell” recommendation for its shares, with a target price of R$12.
BBI prefers to adopt the “glass half full” view. For Fontanesi and França, with commodity prices on a downward trend, cost pressure should gradually ease.
BBI projects an Ebitda margin of 37% for Ambev in 2024, higher than the consensus, which estimates a margin of 31%.
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Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
