ABEV3 Ambev SA

SAO PAULO, May 7, 2014 /PRNewswire/ -- Ambev S.A. [BOVESPA: ABEV3; NYSE: ABEV] announces today its results for the 2014 first quarter. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to International Financial Reporting Standards (IFRS), and should be read together with our quarterly financial information for the three-month period ended March 31, 2014 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: During the quarter we delivered 16.9% net revenue growth. Volume expanded 6.8% while net revenue per hectoliter (NR/hl) grew 9.4%. This performance was mainly driven by Brazil Beer with a strong 21.1% net revenue growth (volume +10.9%, NR/hl +9.2%) along with solid top line performance in most of our divisions (Brazil CSD & NANC +8.8%, HILA-Ex +9.6%, LAS +21.5%, while Canada -3.1%).

Cost of Goods Sold (COGS): Our COGS increased 12.2% in 1Q14. On a per hectoliter basis, costs increased 5.0%, mainly explained by higher currency, partially offset by lower aluminum, barley, corn and sugar hedges as well as higher dilution of fixed costs and depreciation in Brazil.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 17.2% in the quarter. This was mainly driven by (i) sales and marketing expenses in Brazil, due to continued support to our commercial strategies along with different phasing of investments related to the 2014 FIFA World Cup; (ii) distribution costs, impacted by a higher weight of direct distribution in Brazil; and (iii) the higher accruals for variable compensation. Elsewhere, SG&A expenses were negatively impacted by inflationary pressures in Argentina and the phasing of marketing investments in Canada.

EBITDA, Gross margin and EBITDA margin: Our Normalized EBITDA grew 14.8% in 1Q14, reaching R$ 4,051.0 million. Gross margin expanded by 140 basis points to 66.7% driven by expansion in Brazil (+160bps), HILA-Ex (+90bps) and LAS (+200bps), partially offset by a contraction in Canada (-50bps). Normalized EBITDA margin contracted 90 basis points to 44.8% mainly driven by lower Other operating income (-28.3%), as Brazil reported a one time credit of approximately R$ 120 million in 1Q13.

Operating Cash generation and Profit: Cash generated from our operations in 1Q14 improved 48.8% when compared to the same period last year, totaling R$ 2,620.0 million. Our Normalized Profit was R$ 2,603.4 million in the quarter, positively impacted by our operational performance. Normalized Earnings Per Share (EPS) corresponded to R$ 0.16 in the quarter.

CAPEX, Pay-out and Financial discipline: During the first quarter of 2014 we invested R$ 875.8 million in capital expenditures. As of March 31^st, 2014, our net cash position was R$ 4,951.5 million. Such position, however, does not account for the dividends payments of approximately R$ 2 billion announced on March 25^th, 2014 and paid as from April 25^th, 2014. 0.16 in the quarter.

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

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, 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 adjustments. 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 2013 (1Q13 Reference Base). Values in this release may not add up due to rounding.

SOURCE Ambev S.A.