Ambev 2026 Q2 Earnings Call

Good afternoon, everyone, and thank you for joining our second quarter earnings call. Across our footprint, football is part of our culture, one of the strongest passion points that bring people together. Beer has a unique role in creating such special moments. I want to congratulate all the national teams from our markets that represented their countries in the FIFA World Cup. I also want to recognize our teams for their outstanding execution across Ambev's footprint. Moments like these are also where our company stands out. The World Cup is one of the toughest execution tests in our industry. The challenge goes beyond activating a campaign. It is about turning a tournament into a semester-long platform, activating a portfolio rather than a single brand, and connecting consumers and customers across countries, channels, and millions of points of sale while building engagement that lasts beyond the final whistle.

Across our markets, our brands were among those most associated with the event. We did not just take part of the World Cup, we helped shape the category through it. While the World Cup has come to an end, our own game has only reached halftime. Ambev's performance continued to strengthen in the second quarter, with its quality and shape improving versus Q1. Volumes provided a much stronger contribution, growing 1.4% year-over-year, with beer up mid-single digits. Disciplined revenue management and resource allocation supported net revenue growth of 6% and normalized EBITDA growth of 9%, even as we stepped up investment behind our brands. As a highlight, our normalized EPS grew 24%. Looking at the movie rather than the picture, the first half provides a broader view. Total volumes grew 0.7%, with beer volumes growing well ahead of the total.

Net revenue grew 7%, normalized EBITDA increased 10%, implying 1.3 times operational leverage, and normalized EPS also grew 10%. Operating cash flow reached BRL 8 billion, one of Ambev's highest first-half levels. As we enter the second half, we are building a business with stronger foundations and designed to deliver compound profitable growth over time. Behind this progress is our three-pillar growth strategy. Starting with pillar 1, lead and grow the category. This quarter, we advanced on both dimensions. On lead, we strengthened both brand equity and market share across our 5 largest markets. On growth, share gains and improving industry conditions supported beer volume growth in markets that represent over 80% of our volumes. Mainstream continued to improve sequentially, with volumes only slightly below last year. We continue to lead the high-growth segments with a broad and complementary portfolio. Premium remain a key growth engine, growing nearly 20%.

Balanced choices grew more than 60%. No alcohol beer grew around 20%, and flavor beer and RTDs maintain momentum. Michelob ULTRA shows how we scale a relevant consumer proposition across markets. It more than tripled in Brazil and Argentina during the quarter, grew over 50% across our footprint, and is now present in nearly all our markets, connecting with consumers seeking a more active and balanced lifestyle. This takes us to pillar 2, digitize and monetize our ecosystem. Our digital ecosystem has become a key lever for category development. In an increasingly dynamic environment, a broader portfolio creates greater complexity. BEES enable us to manage that complexity with greater precision, strengthening the core while accelerating the new engines of category growth. It is not just a technical backbone, but an execution powerhouse that creates efficiencies and improves how we operate every day.

We read demand faster and more accurately, help customers increase sell-out through better recommendations, and allocate resources to the highest return opportunities. This strengthens our performance while helping our partners grow, as reflected in the continued improvement in our NPS. Ambev BEES Marketplace GMV grew around 60% in both the second quarter and the first half. In the first half, gross margin expanded 6.7 percentage points year-over-year, reaching 22%. In Brazil, marketplace GMV doubled in the first half, with 3P as the main driver. Under pillar 3, optimize our business. This pillar creates the flexibility to deliver on both of our capital allocation priorities, investing behind opportunities that drive long-term growth while consistently returning excess cash to shareholders. In the quarter, we stepped up investments behind our brands while expanding normalized EBITDA margin by 80 basis points.

That discipline, together with solid cash generation, allowed us to advance our share buyback program and announce an additional IOC distribution this quarter. Together, the three pillars reinforce one another, creating a flywheel that strengthens the company and supports sustainable, profitable growth. Before moving to our key markets, let me highlight the breadth of our performance. In both the second quarter and the first half, beer volumes grew or remained broadly stable in seven of our 10 largest markets, while net revenue and EBITDA grew across all business units, showcasing that our progress was not dependent on any single market or growth lever. Starting with Brazil beer. Continued commercial momentum supported another solid quarter. The beer industry continued to improve sequentially.

According to Nielsen, sell-out improved from a high single-digit decline in the second half of 2025 and mid-single digit decline in the first quarter to a slight decline in Q2. Nielsen's measurement calendar ended around June 20, capturing only the early part of the World Cup period. Extending the analysis through month-end and across our broader coverage, we estimate that the industry was slightly positive in the quarter. The World Cup created incremental demand across channels and regions. Nevertheless, it was offset by adverse weather conditions. Average temperatures remained below last year and well below 2024. On a two-year comparison, our industry modeling indicates that adverse weather accounts for the full industry volume gap versus 2024. Even so, our consumer tracking shows sequential improvement in category equity and participation, reinforcing our confidence in the category's resilience in a dynamic consumer and macroeconomic environment. Through that, our business continued to outperform.

Market share expanded year-over-year for the fourth consecutive quarter, consolidating the commercial momentum of our business in Brazil. We estimate that our share increased across mainstream, premium, balanced choices, and beyond beer. Brand equity continued to improve while price relativity remained broadly stable versus last year. This quarter marked one full year since we regained leadership in premium, with our share of the segment reaching an all-time high. Premium grew in the mid-20s and reached approximately 25% of our beer volumes. This performance reflects our new premium architecture, with each brand anchored to distinct consumer need states. Original for authenticity and simplicity. Stella Artois for quiet luxury. Corona for the outdoors and natural living. Michelob ULTRA for an active and balanced lifestyle.

The recent announcement of Spaten Pro takes this architecture into a new space, combining premium credentials with zero alcohol and 10 grams of protein to expand balanced choices into new occasions. Balanced choices volumes double versus last year, while no alcohol grew in the 30s. Mainstream was broadly stable, delivering a significant improvement from a mid-single-digit decline in the first quarter. Together, improving industry conditions and market share progression supported 5% beer volume growth. Serving this portfolio across more than one million points of sale requires precision at scale. Our digital ecosystem provides that capability. Through BEES, we improved assortment, placed the right SKUs in each outlet, and activated our World Cup platform nationwide. Beer distribution grew more than 6%, with returnable bottles up over 4% and premium over 20%.

On the consumer side, Zé Delivery GMV grew 16% versus last year, while orders more than double on the Brazilian national team match days. Zé also give us a real-time view of where the category is heading. Premium already represent 35% of beer volumes on the platform, while balanced choices reached approximately 7%, nearly twice the weight in Brazil beer. This combination translated into net revenue growth of 9%, EBITDA growth of 13%, and 110 basis points of margin expansion while we continue to invest behind our brands. In Brazil NAB, sequential improvement, although the job is not done yet. The recovery has taken longer than expected, and volumes declined 4.4% in the quarter. Around 30% of the decline reflected our decision to phase out volumes from a lower return channel. Adjusting for this decision, volume performance improved versus the first quarter.

By the end of the first half, we had also cycled the toughest comparison base of the year. Market share progressed sequentially, approaching historical levels by the quarter end as price relativity pressures eased. Throughout the period, we continue investing behind our brands to regain momentum while maintaining discipline in revenue management and protecting profitability. As a result, Brazil NAB delivered double-digit EBITDA growth with more than 300 basis points of margin expansion in both the quarter and the first half. Last, we had two distinct realities within this quarter. In Bolivia, temporary social unrest and road blockades disrupted mobility and logistics for much of the period, leading to a double-digit volume decline. The situation has since normalized, and our operations are running normally. Argentina, by contrast, was a highlight.