Ambev Reports 2015 Third Quarter Results Under IFRS

SAO PAULO, Oct. 30, 2015

Operating and Financial Highlights

Top line performance: Our consolidated top line was up 13.2% in the quarter, driven by growth in all of our markets (Brazil +10.5%, CAC +24.8%, LAS +28.0% and Canada +3.0%). Volumes expanded by +0.2%, as the growth in Brazil (+1.0%), CAC (+16.1%) and Canada (+1.2%) was partially offset by a 6.4% decline in LAS. Net revenue per hectoliter (NR/HL) was up by a solid 13.0% driven by our revenue management initiatives, a benefit of premium mix across most of our operations and the higher weight of direct distribution in Brazil.

Cost of Goods Sold (COGS): Our COGS increased 14.1% and cash COGS were up 13.7%. On a per hectoliter basis, cash COGS increased 13.5%, mainly driven by inflationary pressures, unfavorable currency hedges and product mix, partially offset by the benefit of procurement savings initiatives, productivity gains and better commodity hedges.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 14.3% in the quarter mainly coming from higher sales and marketing expenses,  the impact from increased weight of our direct distribution in Brazil and higher administrative costs due to the timing of variable compensation accruals, partially offset by savings in our non working money base.

EBITDA, Gross margin and EBITDA margin: Normalized EBITDA reached R$ 4,992 million (+11.7%) with an EBITDA margin of 46.5% (-60bps). Gross margin was 20 basis points down in the quarter to 65.2%.

Normalized Net Profit and EPS: Normalized Net Profit was R$ 3,087 million in the quarter, 6.3% above last year, as EBITDA growth was partially offset in the quarter by higher net interest expenses and a higher effective tax rate. Year to date, Net Profit is up 15.0%. Normalized EPS was R$ 0.19 in 3Q15 and R$ 0.54 YTD.