Ambev’s Q2 Profit Declines Despite Increase in Sales

Overview

Ambev, the São Paulo-based brewer and subsidiary of Anheuser-Busch InBev SA, reported a decline in profit for the second quarter. While the company experienced a growth in sales, higher costs and operating expenses weighed down on its profitability. Here are the key details of the financial performance:

• Net income decreased to 2.5 billion reais ($519 million) from 3.0 billion reais in the same period last year.
• Earnings per share fell to 0.16 reais from 0.19 reais year-on-year.
• Net sales of 18.9 billion reais were slightly below market expectations, which were forecasted at 19.6 billion reais.

Factors Influencing Profit

Sales Volume

Ambev’s sales volume dropped to 41.3 million hectoliters, down from 42.2 million hectoliters in the previous year.

Costs

Cost of Goods Sold

The cost of goods sold increased to 9.6 billion reais from 9.4 billion reais in the same quarter last year.

Selling, General, and Administrative Expenses

Total selling, general, and administrative expenses rose to 6.1 billion reais from 5.8 billion reais year-on-year.

While costs for the Brazil beer division were impacted by non-commodity price inflation, overall cost growth was slower compared to the previous year. The company attributed this to a more favorable exchange rate and lower commodities prices.

Ambev’s Market Presence

Ambev, as the largest beer producer globally, sells and markets popular brands such as Budweiser, Brahma, and Corona. Brazil remains its primary market, although Ambev also has a presence in other countries in the Americas, including Canada, Argentina, and Chile.