AmBev Reports Solid 4Q Result

The Brazilian beer giant, Companhia de Bebidas das America ( ABV - Analyst Report ) , aka AmBev, reported fourth-quarter 2011 normalized earnings of R$0.98 (54 cents) per share, increasing 14.3% from prior-year quarter’s earnings of R$0.85 (50 cents) a share. Solid top-line performance coupled with improvement in margins resulted in such growth.

Financial Details

Net sales for the quarter increased 12.4% to R$8,378.4 million (US$4,655.9 million) compared with R$7,455.3 million (US$4,380.7 million) in the prior-year quarter. The increase in revenues was primarily attributable to higher prices and a 0.9% growth in organic volumes across all regions.

During the quarter, AmBev's normalized EBITDA rose 17.9% year over year to R$4,506.1 million, while normalized EBITDA margin expanded 250 basis points to 53.8%. The growth mainly resulted from increased volumes of Beer and recovery of Beer market. Besides, retaining a stable market share in Latin America South along with higher volumes in HILA-Ex also boosted growth.

Selling, marketing and administrative expenses increased 6.3% year over year to R$2,052.2 million. AmBev ended the fiscal with cash and cash equivalents of R$8,076.2 million and shareholders’ equity of R$8,303.9 million. During the quarter, the company has paid a dividend of R$5,475.4 million to its shareholders.

The company’s plan to invest R$2.5 billion in Brazil in fiscal 2011 is still on track and will look for opportunities to enhance its working capital and ascertain capex plans. Moreover, in the first quarter of fiscal 2012, the company is expecting volume growth in the range of low to mid-single digit.

AmBev, which competes with Fomento Economico Mexicano S.A. ( FMX - Analyst Report ) and Molson Coors Brewing Company ( TAP - Analyst Report ) , currently, holds a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock. Besides, the company retains a long-term ‘Neutral' recommendation on the stock.