In its most recent report on the Ambev (ABEV3), Itaú BBA analysts revised downwards estimates for the company’s performance in 2024. This time, the bank adopted a more conservative approach in relation to tax subsidies, including changes to both the issue of interest on equity ( JCP) and ICMS, in addition to the economic dynamics in Argentina.
“We maintain our cautious stance in the short term, but we recognize that several non-operational issues have already been priced into the company’s investment thesis over the last 18 months”, points out the bank.
“While the worst moment appears to be behind us, we continue to see no asymmetry large enough to produce returns above our cost of equity,” he adds.
Also in the report, the bank incorporated a new scenario of reducing tax deductibility from the new understanding of the JCP being studied by the government’s economic team, “which should generate a negative impact of 15% on our earnings per share forecast in 2024,” they state. the analysts.
The scenario also includes the issue of ICMS subsidies in the tax base, which should have a negative impact of 7% on the final result, as well as a more conservative approach to Argentine currency conversion in the company’s ‘South Latin America’ division.
By the end of 2024, the Itaú BBA hope that the Ambev’s net profit be positive at R$13.7 billion, a drop of 11% compared to the previous estimate of R$15.4 billion.
“In short, we assess that non-operational externalities have so far overshadowed the positive operational momentum in the Beer Brazil segment, but the additional flow of related news will likely have a softer impact on the investment thesis going forward”, follow the analysts.
Ambev should benefit from benign cost trends in the future, says Itaú BBA
In the text, the bank points out that after 14 years of sequentially high unit costs, Ambev should finally benefit from a benign cost trend in the future, with a positive effect on margins.
For 2024, Itaú BBA raised its projection of Ambev’s adjusted EBITDA margin from 31.9% to 34%, while gross margin rose 1.1 percentage points, to 53.1%. “We hope that Ambev will pass on prices close to inflation, seeking to capture the spread of cost deflation and convert it into profitability”, he reinforces.
Finally, the bank sees Ambev being traded at a P/L of 15 times and 14 times for 2024 and 2025, respectively. “On the positive side, we believe that most of the challenges that the company may face are already on our radar. However, we continue to assume a total return of 13% over the next two years, slightly below our cost of capital.”
Itaú BBA maintained a ‘neutral’ recommendation for Ambev sharesand reduced the target price from R$17 to R$15.
AB InBev, owner of Ambev (ABEV3), announces layoffs in the USA
Anheuser-Busch InBev, out of the blue Ambev, announced the layoff of an unspecified number of employees in its U.S. sales division. The information was released by Bloomberg last week.
According to owner of Ambevthe decision is part of its strategy to concentrate efforts on its biggest brands.
“On January 12, we announced updates to the structure of our U.S. sales team that will simplify our organization and bring even more focus to our mega-brand strategy,” the company said in an emailed response to questions from Bloomberg News . This measure will drive “greater collaboration with our retail and reseller partners.”
Additional details have not yet been released by the company.
AB Inbev, it is worth highlighting, has among its main Brazilian shareholders the billionaire Jorge Paulo Lemann, Carlos Alberto Sicupira Marcel Telles – partners known as ‘the trio’ of 3G Capital, who also have a relevant shareholding in Americanas (AMER3).
Lemann recently transferred his stake in the brewery to his son Max.
Last year, the owner of Ambev announced that it would reduce less than 2% of its workforce in the US, equivalent to around 350 jobs, after an online promotion with a transgender influencer generated a reaction that substantially harmed the company’s revenue.
Ambev share performance
At the close of Thursday (1), shares of the Ambev fell 0.08%, to R$13.07. During the year, the shares fell 3.90%, according to Status Invest.
Graph generated on: 02/02/2024