ABEV — Ambev S.A.

Summary of ABEV Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Normalized EBITDA Margin: Expanded by 50 basis points to 33.4%, marking the third consecutive year of margin growth.
• Net Income: Stated net income reached nearly BRL 16 billion, with an 8.2% increase in stated EPS and a 2% increase in normalized EPS.
• Cash Flow: Operating cash flow totaled BRL 24.5 billion, down BRL 1.6 billion from the previous year due to softer volumes impacting working capital.
• Shareholder Returns: Approximately BRL 20 billion returned to shareholders, the highest in company history, including BRL 13.2 billion in dividends and BRL 2.5 billion in a new share buyback program.

2. Strategic Updates and Business Highlights:

• Three-Pillar Strategy: Continued focus on strengthening the portfolio, enhancing customer relationships, and advancing profitability. The company emphasized its ambidextrous approach to managing core and premium segments simultaneously.
• BEES Marketplace: Full-year GMV grew 70%, showcasing the effectiveness of digital tools in improving execution at the point of sale.
• Zé Delivery: Achieved BRL 4.7 billion in GMV, with 67 million orders and 27 million active users, solidifying its position in Brazil's convenience market.
• Market Share Gains: In Q4, Brazil Beer experienced a low single-digit market share gain, with premium and nonalcohol segments showing significant growth.

3. Forward Guidance and Outlook:

• 2026 Expectations: Anticipating continued growth driven by major events like the FIFA World Cup and a holiday-rich calendar in Brazil.
• Cost Guidance: Expecting Brazil Beer cash COGS per hectoliter to increase by 4.5% to 7.5%, influenced by commodity prices and operational costs.
• Pricing Strategy: Aiming to balance accessibility for consumers with the need to protect profitability, leveraging a comprehensive portfolio to manage revenue effectively.

4. Bad News, Challenges, or Points of Concern:

• Volume Pressure: 2025 saw volumes pressured by adverse weather conditions and changing consumer occasions, particularly impacting core brands reliant on out-of-home consumption.
• Argentina Market: Despite macro improvements, consumption recovery has been slower than expected, affecting overall performance.
• Financial Expenses: Nearly BRL 4 billion in net financial expenses were attributed to FX losses and costs related to sourcing U.S. dollars in Bolivia.

5. Notable Q&A Insights:

• Brazil Beer Volumes: Management noted that the decline in volumes was primarily due to unfavorable weather conditions, particularly in the first half of the year, but saw recovery in December.
• Core vs. Premium Brands: There is ongoing debate about the relevance of core brands versus premium offerings, with management asserting the importance of maintaining core brand strength to ensure accessibility.
• GLP-1 Drug Impact: No significant impact on the portfolio was observed from GLP-1 drugs, but the company is monitoring trends and consumer behavior closely.
• Capital Allocation: Discussions around dividends are ongoing, with a focus on maintaining a consistent return to shareholders while investing in growth and M&A opportunities.

Overall, ABEV demonstrated resilience in a challenging environment, with strategic initiatives aimed at long-term growth and profitability, while also addressing immediate operational challenges and market dynamics.