Ambev's Q1 profit up 26.6% to 1.65B reais, as net sales inched 7.2% to 6.12B reais driven primarily by price hikes; organic volume up 0.2%, offset by a 1.1% volume contraction in Brazil and a 6.5% contraction in Canada

SAO PAULO , May 4, 2011 (press release) – Companhia de Bebidas das Americas – Ambev [BOVESPA: AMBV4, AMBV3; and NYSE: ABV, ABVc] announces today its results for the 2011 first quarter (Q1 2011). The following financial and operating information, unless otherwise indicated, is presented in nominal Reais and prepared in accordance with International Financial and Reporting Standards (IFRS), and should be read in conjunction with our quarterly financial information for the three months period ended March 31, 2011 filed with the CVM and submitted to the SEC.

This press release segregates the impact of organic changes from those arising from changes in scope or currency translation.

Scope changes represent the impact of acquisitions and divestitures other than those eliminated from the base, the start up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year over year changes in accounting estimates and other assumptions that management does not consider as part of the underlying performance of the business. Unless stated, percentage changes in this press release are both organic and normalized in nature. Whenever used in this document, the term "normalized" refers to performance measures (EBITDA, EBIT, Profit, EPS) before special items. Special items are either income or expenses which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature. Normalized measures are additional measures used by management and should not replace the measures determined in accordance with IFRS as indicators of the Company's performance. Comparisons, unless otherwise stated, refer to the first quarter of 2010 (Q1 2010). Values in this release may not add up due to rounding.

OPERATING AND FINANCIAL HIGHLIGHTS

Top line performance: Net sales grew 10.5% driven mainly by price increases across our regions, with Net Revenue/hl growing 10.4% in the period. Organic volume growth of 0.2% in the period due to a 3.7% growth in Latin America South and a 13.2% in HILA-Ex offset by a -1.1% volume contraction in Brazil and a -6.5% contraction in Canada.

Cost of Goods Sold (COGS) and Selling, General & Administrative (SG&A) expenses: COGS/hl increased by 8.8% mainly due to raw materials costs as well as packaging costs, which were partly offset in the quarter by gains in currency hedges and productivity initiatives. SG&A (excl. depreciation & amortization) increased by 10.5% mainly as a result of general inflation and higher logistic costs in Brazil due to higher direct distribution weight and transfer of products between plants in advance of the footprint improvement expected from our capex plans.

EBITDA, Operating Cash generation and Profit: Our Normalized EBITDA reached R$3,098.5 million in Q1 2011, an organic growth of +12.4%, while margin expanded 80 bps in the period to 47.2%. Cash generated from operations in Q1 was R$1,983.9 million, a 17.9% decrease as compared to same 2010 period. Our Normalized Profit was R$2,089.2 million (+21.7%), while our Normalized Earnings per share (EPS) grew 20.9%.

Payout and Financial discipline: We paid approximately R$1.8 billion in dividends on March 22nd.

   

Financial highlights - Ambev consolidated

   

% As

%

 

R$ million

1Q10

1Q11

Reported

Organic

 

Total volumes

40,926.6

40,796.6

-0.3%

0.2%

 

Beer

29,399.3

29,476.0

0.3%

0.8%

 

CSD and NANC

11,527.3

11,320.6

-1.8%

-1.5%

 
           

Net sales

6,121.4

6,562.1

7.2%

10.5%

 

Gross profit

4,122.4

4,455.0

8.1%

11.3%

 

Gross margin

67.3%

67.9%

50 bps

50 bps

 

EBITDA

2,774.0

3,098.0

11.7%

13.7%

 

EBITDA margin

45.3%

47.2%

190 bps

130 bps

 

Normalized EBITDA

2,806.5

3,098.5

10.4%

12.4%

 

Normalized EBITDA margin

45.8%

47.2%

140 bps

80 bps

 

Profit - Ambev holders

1,650.2

2,088.7

26.6%

   

Normalized profit - Ambev holders

1,716.6

2,089.2

21.7%

   

No. of share outstanding (millions)

3,082.2

3,103.5

     

EPS (R$/shares)

0.54

0.67

25.7%

   

Normalized EPS

0.56

0.67

20.9%

   

Note: Earnings per share calculation is based on outstanding shares (total existing shares excluding shares held in treasury).

 
         

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