Can you provide color on your hedging strategy for raw materials and the outlook for 2026, and confirm the 2025 cash COGS guidance?

The hedging strategy remains unchanged (12 months forward, non-speculative). Management is confident in the Brazil Beer cash COGS per hectoliter guidance of 5.5% to 8.5% for FY25, noting it's currently at the lower end of that range. “We are maintaining our hedging strategy the same as the prior year. So it's a hedging strategy that you look 12 months forward, and it's not speculative.”

How do pricing dynamics differ between off-trade and on-trade channels, and across Core and Premium categories, especially given the economic situation and weather impacts?

Revenue management initiatives started after Carnival, increasing prices across segments. Net revenue per hectoliter aligned with inflation, boosted by premiumization. Core brands were more sensitive to pricing and weather-impacted on-premises channels. H2 strategy will balance long-term pricing (aligned with CPI) with short-term cost inflation. “Our revenue management agenda has started in March just after the Carnival, as I mentioned earlier, was built throughout the quarter, right? So we increased prices pretty much in all segments, which helped us to achieve the quarter 2 net revenue per hectoliter performance that you saw in Brazil.”

What drove the acceleration in Bees Marketplace GMV, and what's happening with net revenue per hectoliter in LAS, particularly Argentina, given high inflation?

Bees Marketplace GMV grew 90% (Brazil 100%), with 3P surpassing 1P, driven by partnerships. Marketplace margin improved 400 bps (Brazil 600 bps to 17%). In Argentina, sequential market improvement is observed, and management is carefully protecting margins by balancing cost control and consumer's ability to absorb price increases. “In terms of marketplace, we grew 90% in the quarter with Brazil growing 100%, right? With Q2 and year-to-date, it's very interesting at this point, the 3P part of the marketplace surpassing the 1P in terms of GMV.”

ABEV

Ambev (ABEV) Q2 FY25 earnings call: guidance and Q&A

Earnings call· Jun 2025 (Q2 FY25)· Consumer Staples· Jul 31, 2025

Source: earnings call transcript

Executive summary

Ambev Q2 FY25 — Strong Brand Equity and Digital Growth Drive Margin Expansion Amidst Weather Headwinds

Ambev navigated a challenging Q2 FY25, marked by adverse weather and soft industry volumes, by leveraging strong brand equity, disciplined revenue and cost management, and robust growth in its digital ecosystem. The company's strategic focus on premiumization and operational efficiency enabled significant EBITDA and net income growth, positioning it confidently for the second half of the year despite ongoing cost pressures.

Highlights

Organic EBITDA increased high single-digits with 110 basis points of margin expansion in Q2 FY25.
Year-to-date EBITDA grew double digits with 160 basis points of margin expansion.
Bees Marketplace GMV grew 90%, reaching an annualized BRL 7.4 billion.
Premium and super Premium brands delivered low teens growth, expanding in 7 out of top 10 markets.
Net income improved 15% to BRL 2.8 billion in Q2 FY25.

Concerns

Brazil Beer volumes declined 9% in Q2 FY25, primarily due to 65 colder days compared to last year.
June volumes experienced a mid-teens decline due to adverse weather.
Market share pressure linked to revenue management decisions resulted in a low single-digit decline.
Core segment volumes declined low teens due to high sensitivity to industry environment and revenue management.

Guidance & targets

Category	Target	Timeline	Confidence
Cash COGS per hectoliter (Brazil Beer, ex-non-Ambev marketplace)	within the range of 5.5% and 8.5% high materiality	FY25	High
Consolidated margins	sustaining flat year-on-year margins high materiality	FY25	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Brazil Beer Volumes declined 9%, mostly driven by unfavorable weather (65 colder days). Brand equity improved, softening market share impact from revenue management decisions to a low single-digit decline. Premium and super Premium brands gained market share in their segment. Premium and super Premium brands growth: mid-teensAbove Core brands volume share: almost 30%Core segment volume decline: low teensBalanced Choice brands volume share: 2.5% (H1 FY25), up from 1.4% (H1 FY24)	—	-9%	—	—
Brazil Non-Alcoholic Net volumes were slightly positive despite a mid-teens decline in June. Top line driven by healthy net revenue per hectoliter and resilience of brands, gaining market share. Non-sugar portfolio growth: above 30%	—	slightly positive	—	—
Argentina Volume performance presented another sequential improvement with beer volumes returning to growth after 7 quarters, despite underperforming the industry due to revenue management choices. Mega brands' health improved. Premium segment growth: double digits	—	returned to growth	sequential improvement	—
Dominican Republic The consumption environment presented a sequential improvement. Beer gained share of draught, and the Presidente family gained brand equity. Beer gained share of draught	—	—	sequential improvement	—
Canada Volumes grew 0.8%, more than offsetting a soft industry affected by colder temperatures. Performance driven by Ontario industry growth (route-to-market change) and outperformance in non-alcoholic beers. Fastest-growing beer brands in the country with share of draught and market share gains. Non-alcoholic beer industry growth: mid-teensAmbev non-alcoholic beer growth: mid-20sNon-alcoholic beer volume share: almost 5%	—	0.8%	—	—

Risks & headwinds

Soft industry volumes due to adverse weather conditions Q2 FY25

Brazil Beer volumes declined 9% in Q2 FY25, with June experiencing a mid-teens decline; 65 colder days compared to last year.

Mitigation:Focus on brand equity and revenue management decisions to soften market share impact; expectation of improvement in H2 with better weather.

Inflation impacting essential goods and disposable income Q2 FY25 and ongoing

30% of Brazil Beer industry decline attributed to inflation.

Mitigation:Balancing long-term pricing aligned with CPI while managing short-term cost inflation and protecting profitability; careful consideration of consumer's ability to absorb price increases.

FX carry costs and losses Q2 FY25 and ongoing

Increased financial expenses due to FX carry costs in Brazil (interest rate differential) and FX losses related to dollar purchase in Bolivia.

Mitigation:Maintaining a 12-month forward, non-speculative hedging strategy; careful management of cash repatriation from other markets.

Argentine peso devaluation Q2 FY25

Argentine peso devaluation of 12% in Q2 FY25 significantly affected results under IFRS.

Mitigation:Careful protection of margins by looking into cost and consumer capacity to absorb price increases; sequential improvement in the market overall.

What to watch in Q3 FY25

Brazil Beer Volume Recovery

next quarter

Current 9% decline in Q2 FY25, mid-teens decline in June

Target Significant improvement in volumes

Why it matters

Volume recovery in Brazil is crucial for overall performance, especially after significant weather-related impacts in Q2.

July doesn't look at all to June in terms of weather conditions, which means that we do see a significant improvement throughout the month, right, despite the fact that the beginning of the month was also impacted by residual adverse weather.

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Q&A highlights

Why was the Brazil volume decline so steep, and what gives confidence for H2 recovery? Can you elaborate on the cost-cutting initiatives and their future potential?

Management attributed 70% of the industry decline to adverse weather (65 colder days, mid-teens June decline) and 30% to inflation. They expect H2 to improve, with July already showing better weather. Cost control focuses on controllable elements like SKU rationalization and distribution, with confidence in continued optimization.

“70% of the industry decline based on our industry models is explained by the weather. And the reason why is the following: we faced 65 colder days versus last year with a high concentration in 1 month.”

asked by Isabella Simonato · answered by Carlos Eduardo Lisboa

2 min read 6 chapters

Detailed narrative

Q2 FY25 Performance Overview

Ambev delivered high single-digit organic EBITDA growth with 110 basis points of margin expansion in Q2 FY25, despite soft industry volumes primarily due to adverse weather conditions. Year-to-date, the company achieved mid-single-digit top-line growth, double-digit EBITDA growth with 160 basis points of margin expansion, and 6.5% EPS growth.

Cash flow from operating activities remained resilient, growing 4% year-to-date, supporting an intermediary dividend payout of BRL 2 billion, totaling BRL 6 billion declared this year.

Strategic Pillar 1: Lead and Grow the Category

The company's Premium and super Premium brands grew low teens, expanding in 7 out of its top 10 markets, gaining market share in the segment. The Balanced Choice portfolio maintained strong growth momentum, expanding in the low 20s, addressing evolving consumer preferences.

Brand equity improved, softening the market share impact from revenue management decisions, though Core segment volumes declined due to higher sensitivity to industry performance and revenue management decisions, particularly in out-of-home consumption occasions impacted by adverse weather.

Strategic Pillar 2: Digitize and Monetize the Ecosystem

Bees Marketplace continued its momentum with GMV growing 90%, reaching an annualized BRL 7.4 billion, led by partnerships with Nestle, L'Oréal, and PepsiCo Foods. Zé Delivery achieved a 7% GMV increase, supported by an 11% rise in average order value, with Gen Z LDA and millennials representing nearly 80% of its buyers.

These digital platforms are strengthening the Core business through better customer services, increasing SKUs per POC by 3.4% year-to-date, and improving customer NPS to nearly 70 points.

Strategic Pillar 3: Optimize Our Business

A disciplined focus on cost efficiency generated over BRL 500 million in savings in the quarter, more than offsetting non-commodity cost inflation. This included a 10% reduction in SKUs in 2025, eliminating low-churn items to increase productivity at breweries and distribution centers. These efforts were essential to achieve an operational leverage of 2.2x in the quarter and keep Brazil Beer's cost performance within full-year guidance.

Brazil Market Dynamics

Brazil Beer volumes declined 9% in Q2 FY25, primarily driven by 65 colder days compared to last year, with June alone experiencing a mid-teens decline. This weather impact accounted for 70% of the estimated mid-single-digit industry sellout decline, with the remaining 30% attributed to inflation impacting essential goods and consumer disposable income.

The company's revenue management decisions, which increased prices across segments, resulted in a low single-digit market share loss.

Argentina and Canada Performance

Argentina showed sequential improvement, with beer volumes returning to growth after 7 quarters, despite underperforming the industry due to revenue management choices. The Premium segment grew double digits, and mega brands' health improved. In Canada, volumes grew 0.8%, offsetting a soft industry affected by colder temperatures, driven by the Ontario industry's route-to-market change and mid-20s growth in non-alcoholic beers, which now represent almost 5% of total volumes.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.