Brazil’s Ambev delivers robust Q4 earnings but braces for 2025 uncertainty

Brazil's brewing giant Ambev posted a strong increase in its fourth-quarter adjusted net profit, even as the company contended with slowing total volumes in a challenging market environment.

For the October-December quarter, the company posted a 7.5% increase in adjusted net profit, reaching 5.02 billion reais ($874.63 million), according to an official securities filing on Wednesday.

While the profit numbers are solid for the quarter, volumes were under pressure due to uncertainties in demand in major markets of Ambev.

Total volumes declined by 3.2% during the period, impacted by softer market conditions in Argentina and adverse weather in Brazil.

Nonetheless, Ambev still managed to report a 4.2% year-on-year organic growth in net revenues, amounting to R$27.04 billion.

This strong growth was driven by pricing strategies and higher revenue per hectoliter across key markets.

Market share gains

Ambev estimates that it gained market share in 2024, with its megabrands showing improvements in brand health.

In the premium and super-premium segment, volumes grew by low teens, led by Corona and Spaten.

These brands have more than tripled their premium volumes compared to 2020, as per the company.

Within the core plus segment, Budweiser recorded a significant volume increase, growing by high forties in percentage terms.

In the core segment, Brahma and Antarctica jointly grew by mid-single digits, with Brahma reaching record volumes.

Ambev continued to lead in the no-alcohol beer segment and focused on innovation.

Approximately 57% of Corona family growth came from new packaging formats and the success of Corona Cero.

Ambev 2025 guidance

Ambev anticipates cost pressures in 2025 due to rising commodity prices and currency depreciation.

The company projects its cost of goods sold (COGS) per hectoliter, excluding depreciation and amortization, to increase between 5.5% and 8.5%.

Key cost drivers:

• Aluminum price hikes and a weaker Brazilian real are expected to push costs higher.
• Projections assume stable commodity prices and exchange rates, but remain subject to risks and uncertainties.

"Nonetheless, we will continue to work to find opportunities and enhance efficiency, pursuing our ambition of expanding consolidated margins," the company said in a statement.

Investors cheer the earnings

Immediately after announcing Ambev's fourth-quarter earnings, investor sentiment warmed up.

Ambev shares soared more than 5% in early trading in São Paulo, putting it among the top gainers on the local benchmark stock index Bovespa, which was 0.4% higher.

Investors are optimistic about the company's ability to withstand any forthcoming challenges in the near term and the overall outlook for the company following this market response.

As Ambev continues to navigate the complexities of the beverage sector, its recent financial success demonstrates a combination of strategic adaptability and strong operational management.

While the outlook for 2025 remains cautious due to higher input costs and market instability, Ambev's commitment to capitalizing on growth possibilities may benefit it in the long run.