Ambev (NYSE:ABEV) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.

The full earnings call is available at https://ri.ambev.com.br/en/results-conference-call-2q26/

Summary

Ambev S.A. reported a 6% increase in net revenue and a 9% growth in normalized EBITDA for Q2 2026, driven by disciplined revenue management and resource allocation.

The company's three-pillar growth strategy focuses on leading and growing the category, digitizing and monetizing the ecosystem, and optimizing the business. This strategy supported share gains and volume growth, particularly in premium and no-alcohol segments.

Ambev's digital platform, BEES, has been a key factor in managing portfolio complexity and improving operational efficiencies, contributing to a 60% growth in marketplace GMV.

In Brazil, beer volumes grew by 5%, supported by market share gains and favorable industry conditions, despite adverse weather impacting sales.

Q2 financial performance was strong, with normalized EPS growing 24% and operating cash flow reaching 8 billion reais, one of the highest first-half levels for the company.

Management highlighted the impact of the FIFA World Cup as a successful platform for brand activation across multiple markets, contributing to industry volume growth.

Ambev plans continued investments behind brand growth while maintaining profitability, supported by solid cash generation and an active share buyback program.

The company expressed confidence in its strategy and the resilience of the beer category, despite economic challenges and high household debt levels in key markets.

Full Transcript

OPERATOR (Operator)

Good afternoon and thank you for waiting. We would like to welcome everyone to Ambev's 2026 second-quarter conference call. Today with us we have Mr. Carlos Lisboa, Ambev CEO, and Mr. Guillermi Fleuri, CFO and Investor Relations Officer. As a reminder, this conference presentation is available for download on our website ri.ambev.com.br as well as through the webcast link. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the company's presentation.

After Ambev's remarks are completed, there will be a Q&A session, during which we kindly ask that each participating sell-side analyst ask one question. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature, and unless otherwise stated, percentage changes refer to comparison with 2025 second-quarter results.

Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, operating profit, and EBITDA on a fully reported basis in the earnings release. Now I will turn the conference over to Mr. Carlos Lisboa. Mr. Lisboa, you may begin your conference.

Carlos Eduardo Lisboa, CEO AMBEV

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, and 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 in 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 half time. 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 8 billion reais, 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 five 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 remained a key growth engine, growing nearly 20%. Balanced choices grew more than 60%. No-alcohol beer grew around 20%, and flavored beer and RTDs maintained 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 enables 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 sellout 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, sellout 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 needs: Original for authenticity and simplicity, Stella Artois for quiet luxury, Corona for the outdoors and natural living, and Michelob Ultra for an active and balanced lifestyle. The recent announcement of SpartanPro 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 doubled 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 1 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 others more than doubled. On the Brazilian national team match days, Zé Delivery also gives us a real-time view of where the category is heading. Premium already represents 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 continued investing behind our brands to regain momentum while maintaining disciplined 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.

In LAS, 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. Our beer volumes grew low single digit, lapping growth in the same quarter last year, supported mainly by continued market share momentum and improving industry, and the national team's World Cup performance.

Premium grew high single digit, led by Stella Artois and Corona. Balanced choices reached a mid single digit mix of our beer volumes, supported by the launch of Michelob Ultra and Stella Pure Gold. Mainstream was broadly stable, with Quilmes strengthening brand equity and mainstream share. This is the same category development playbook we are executing in Brazil, scaling premium and developing balanced choices while continuing to strengthen mainstream.

In the Dominican Republic, our business delivered mid single digit volume growth in the quarter despite adverse weather conditions in April. The consumption environment remained constructive, supported by a favorable macro backdrop and healthy price relativity versus other alcoholic beverages. Beer continued to gain share within alcoholic beverages and our volumes grew high single digits. In the first half, premium grew more than 40%, led by Corona and Michelob Ultra, while mainstream grew low single digit, supported by Presidente, and in the first half.

Presidente's brand equity remains strong, reinforcing its leadership and cultural connection with Dominican consumers. Finally, in Canada, we continue to outperform in a dynamic environment. The beer industry declined low single digits as unfavorable weather and softer consumer demand weighed on performance. Trends nevertheless improved from the first quarter, supported by FIFA World Cup occasions. We gained market share in both beer and beyond beer.

Within beer, Michelob Ultra continued to lead the development of balanced choices, while Busch strengthened our mainstream performance. In beyond beer, Mike's and Cold Water remain important growth drivers. As a result, Canada delivered low single digit top line growth alongside low to mid single digit EBITDA growth and margin expansion in both the quarter and the first half. With that, I will now turn it over to Flori for the financial highlights.

Lucas Lira, Chief Financial, Investor Relations & Shared Services Officer

Thank you, Lisboa. Hello and good afternoon, everyone. As we close the first half of the year, our financial performance reflects the mindset that has guided us over the past quarters to create value through disciplined resource allocation, focusing on what we can control. In the first half of 2026 we delivered 9.6% normalized EBITDA growth with margin expansion across all of our business units, as well as 10.1% growth in normalized net income. Stated EBITDA grew 2.5% and stated net income increased by 11.6%.

From a cash flow perspective, our first half performance allows us to continue executing our capital allocation priorities of investing in the organic growth of our business while also returning excess cash to shareholders over time. The first half performance was supported by another quarter of consistent execution of our growth strategy. Now let me walk you through the second quarter highlights. Starting with operating performance, normalized EBITDA grew 8.9% in the period, reaching 6.4 billion reais with 80 basis points of margin expansion.

This reflects disciplined decisions across costs, expenses and revenue management, allowing us to expand both gross margin and EBITDA margin while stepping up investments behind our brands during the FIFA World Cup. Consolidated cash COGS per hectoliter, excluding marketplace, increased by 2.2% in the period, supported by continued productivity and operational efficiencies across our footprint. Here it is worth noting that in the first half of the year, Brazil beer cash COGS per hectoliter, excluding marketplace products, increased by 9.7%, while our full year guidance remains unchanged at between 4.5% and 7.5%.

Consolidated cash SG&A grew by 10.7% in the quarter, mainly driven by higher sales and marketing expenses reflecting a portion of brand activations during the FIFA World Cup. As we mentioned during our first quarter earnings call, these expenses tend to follow the timing of our mega events calendar, and Q2 reflected that. Distribution expenses also increased in the period, mostly due to volume performance as well as one-off expenses as part of restructuring initiatives in Argentina.

Taken together, these results illustrate how we think about resource allocation. Our cost PMO initiative that started last year is based on a continuous improvement mindset together with choices to focus on growing return on invested capital, ultimately freeing up resources to reinvest in our strategic priorities and pursue our ambition of delivering consolidated margin expansion over time. On administrative expenses, it is important to remember that the effect of lower volumes in 2025 impacted our bonus accruals in the second half of last year, creating a potentially tougher comparison base going forward.

Now moving to below-EBITDA lines, net financial expenses totaled 486 million reais in the quarter, a 50% reduction versus the same period of last year, mainly explained by two positive non-cash factors in the non-derivative instruments line. First, in Bolivia, following an approximately 40% devaluation of the local currency in late June, we had a positive effect coming from the conversion of hard currency held in the company. These reserves were built to secure liquidity to meet expected foreign currency obligations, including payments to certain suppliers and dividend remittances.

Second, a positive effect that came from other markets where local currencies were more stable during the quarter, resulting in lower conversion losses on monetary balances compared to last year. On the Bolivia devaluation, it is worth noting that our consolidated income statement reflects average monthly FX rates as required under the applicable accounting standards. As a result, going forward, the local currency devaluation is expected to gradually create a negative translation impact on our financial and operational results.

Turning to income taxes, our consolidated effective tax rate in the quarter was 19.9% compared to 18.4% in the second quarter of 2025, reflecting country mix effects over higher earnings before taxes, partially offset by regular income tax attributes. In the first six months of the year, our ETR was 20.6%, broadly in line with the 20.3% recorded in the first half of 2025. As a result, both normalized and stated net income reached about 3.5 billion reais, increasing 23.3% and 24.5% respectively versus last year.

Normalized and stated earnings per share reached 22 cents of Brazilian reais, representing respectively a 24.2% and 25.4% increase versus last year. Now turning to cash flow generation, let's go beyond the quarter and look at our performance in the first half of the year. Cash flow from operating activities totaled 7.9 billion reais, an increase of 3.6 billion reais, representing over 80% improvement versus the same period of last year. This was mainly driven by higher EBITDA and improved working capital dynamics, with payables reflecting our volume performance.

Cash flow used in investing activities totaled 3.3 billion reais, 1.5 billion reais higher than in the first half of 2025, primarily reflecting the deconsolidation of assets and previously reported as restricted cash in CAC as disclosed in our first quarter financial statement, partially offset by lower CAPEX investments. It is important to note that we continue to invest with discipline in our operations, balancing brewery upgrades, capacity expansion, innovation capabilities, the expansion of our commercial assets base and our technology infrastructure, all aimed at supporting long-term value creation.

Cash flow used in financing activities totaled 5.7 billion reais, 7.1 billion reais below last year, mainly explained by our 6.7 billion reais 2024 dividend payout in early 2025. This cash flow performance supports our shareholders agenda, already demonstrated this year through: 1) the execution of approximately 95% of our 208 million share buyback program announced in October last year, representing roughly 3.2 billion reais cash disbursement until July; 2) the 4.2 billion reais 2025 IOC payment announcements before withholding tax, to be fully paid by October 6; and 3) the 2026 IOC declarations of 1.8 billion reais made so far this year before withholding tax, to be paid by December. Altogether, such events represent 5.9 billion reais returned to our shareholders on a pre-tax cash basis as announced until the date of this report. Now back to you, Lisboa. Thank you.

Carlos Eduardo Lisboa, CEO AMBEV

Let me close with these three messages. First, our first half performance reinforced our conviction in the category. Beer is big, profitable and growing in the majority of our markets with healthy fundamentals. Its cultural relevance and versatility allow us to serve a broad range of consumers, need states and occasions, giving the category meaningful room to grow. Second, as category captain our role is to bridge the gap between beer’s potential and actual consumption.

We have what it takes to do that: a proven growth formula built around our three-pillar strategy and being deployed across our footprint through replicable models. And third, the flywheel is in motion and gaining momentum. We closed the first half with positive volume growth, high single-digit net revenue growth, almost double digits, normalized EBITDA growth with margin expansion and double-digit normalized EPS growth, solid operating cash flow supported continued shareholder returns.

The consistency of this performance gives us confidence as we build on this progress in the second half. Before I finish, I want to thank our teams and business partners across all markets for their ownership, resilience and commitment, and for continuing to dream big to create a future with more cheers. Thank you very much for joining us today. And with that, let me hand it over to the operator.

OPERATOR (Operator)

We will now begin the Q&A session. To ask a question, we kindly ask sell-side analysts to click on the raise hand button at the bottom of the screen. To remove a question from the queue, or after your question has been addressed, please click the lower hand button. We kindly reinforce our request that each participant ask only one single question. Our first question comes from Nadine Sarwat with Bernstein. You can open your microphone.

Nadine Sarwat, Analyst at Bernstein

Hello everybody. Thank you for taking my question. I'd like to zoom in on Brazil NAB and on the -4.4 volume growth. Thank you for confirming that 30% of that decline was from the channel phase-out. So am I correct in assuming that that channel phase-out will continue to be a headwind year on year for the next three quarters? And then, putting that to one side, can you share with us how the underlying soft drinks market did so that we can get a sense of that underperformance that you mentioned?

And how are you thinking about that segment in the second half of the year? Thank you.

Carlos Eduardo Lisboa, CEO AMBEV

Hi, Nadine. Lisboa here. Thanks for the question. So you already mentioned about the phase-out. So let me just complement the point with the following. First, the NAB industry in the first semester of this year was positive, right? But we couldn't leverage that much because the recovery for us took longer than expected because we were, you know, focused on correcting the commercial course — I mean, relative price relativity, market share performance, volume performance — without compromising the health of the P&L of our business unit. Okay.

And I'm glad that we closed the quarter two very in line with our expectations. It took longer, but now we are very close because, you know, we corrected the price relativity without compromising what we deliver in terms of net revenue, price/mix performance in the quarter. Two, the market share got back in line with historical levels by the end of the quarter, right? And three, as a consequence, we saw our volumes also improving within this period, right.

So when we look forward, I think it's always good to have in mind that last year we had two different years within the year, right? Which means that we just cycled through the most tough comparison base for us, volume-wise and share-wise, right? Which means that now, moving forward, we're going to have a way better context to navigate with the recovery on top — the recovery of the balance that I just mentioned to you. And in terms of, you know, health, we do — I won't go into any sort of, you know, guidance about the industry moving forward, right?

But given what I just mentioned to you, we should expect a way better, you know, situation for us on the NAB business in the second half of this year.

Florian

And again, Florian here. If I can just complement Lisboa, I also heard you asking about how that adjustment, the 30%, will continue on the year. On that one, allow me to make two comments. That started, or that is part of, the resource allocation that we've been doing with Lisboa, thinking about profitability, channels, so on and so forth. And that is related to a specific fast food channel that we've exited. Therefore, that will continue to lap throughout this year.

Nadine Sarwat, Analyst at Bernstein

Okay, perfect. Thank you very much.

Florian

Thank you.

OPERATOR (Operator)

Our next question comes from Thiago Duarte with BTG. Your microphone is open.

Thiago Duarte, Analyst at BTG Pactual

Hello. Thank you very much. Hello, Lisboa, Florian, everybody. Yeah, my question is now moving to Beer Brazil and it's really trying to clean up the figures a little bit considering the World Cup. So you already mentioned the additional impact that the World Cup had in sales and marketing as you try to activate the brands and everything. So if you could also extrapolate a little bit of that analysis into your top line for Brazil beer, both in terms of what you think the volume contribution was and also in terms of whether the event may have had an impact in terms of your revenue per hectoliter or average pricing for the quarter.

That would be my question. Thank you.

Carlos Eduardo Lisboa, CEO AMBEV

Hello, Thiago, nice to talk to you again. Let me answer your question starting from the overall assessment of the event, right? The World Cup, a positive is always important to, you know, emphasize that. And broadly in line with our expectations for us was a six-month platform activation, right, across portfolio channels, right, regions, countries — so very different from one single brand campaign, right? Broad impact in line with what we were expecting across the footprint.

Not only Brazil, right, but Brazil, Argentina, Panama, Paraguay, Canada — pretty much all of them — bringing pretty interesting results not only in volume industry recovery, but also in terms of brand equity for our portfolio. Specifically about Brazil, what we estimated in terms of impact was around 0.5 to 1 percentage point in industry growth for the quarter, right, which is also in line with what we stated during our first quarter announcement, right?

It was very interesting for us because we could activate — I'm going to use Brazil as an example, right — not only for our core brands, but we did so for, you know, pretty much all segments in our portfolio, from core to premium, with the introduction and acceleration of Michelob. Right. We did so as well with, you know, the balanced choice portfolio and even with the Beyond Beer — we activated Flying Fleet. Right? So it was very interesting for us to manage, you know, the portfolio during the tournament.

In terms of overall performance, for the volume performance for the quarter, we estimate that the industry was slightly positive, as I mentioned during the interview. On top of that we had a broad-based share gain that pretty much explains the overall volume performance of the company. And when we look at net revenue per hectoliter, it's always good to have in mind that the first quarter result was a combination of a strong carryover on top of a prior year without any sort of carryover.

On top of that, the initial implementation of calendar and the combination and the mix — and the combination of the three components — delivered a very solid, right, net revenue per hectoliter performance. And we were expecting somehow a dilution of our carryover, right, through quarter two, and we kept the discipline, right, on the rate side. As a consequence, we delivered for the semester, right, a net revenue per hectoliter that increased around 6%, which is 50% pretty much above inflation, with a good combination of rate in line with inflation and a mix contribution on top of that.

And I always like to emphasize as well, Thiago, the mission of the net revenue strategy for us, which is, on one fold, protect profitability. However, on the other fold, also protect the accessibility of our consumers to the category. And that's exactly the type of strategy we're going to keep in place for the residual part of the year.

Thiago Duarte, Analyst at BTG Pactual

Thank you. And just one clarification from the statement you just made, Lisboa. You said you were already expecting some dilution from the net revenue per hectoliter into Q2, and I'm assuming that's because of the World Cup.

Carlos Eduardo Lisboa, CEO AMBEV

No, it's because of the carryover dilution from quarter one to quarter two and due to the comp base against 25. Because keep in mind that, you know, in the second quarter last year is when we kick off, right, our, you know, net revenue agenda, right, in the year. That's why we also saw an impact — a temporary impact — in market share that we brought recovery in Q3. That's the reason why we were expecting — not due to the World Cup.

Thiago Duarte, Analyst at BTG Pactual

Perfect. Because you're looking on a year-over-year basis for you on a Q-over-Q basis. That's clear. Thank you so much.

Carlos Eduardo Lisboa, CEO AMBEV

Thank you very much.

OPERATOR (Operator)

Our next question comes from Carlos Laboy with HSBC. You can open your microphone.

Carlos Laboy, Analyst at HSBC

Yes. Hello. Hello everyone. Lisboa, I keep coming back to kind of a different variant of the same question as previous quarters, right. It seems that your brand strength indicators and market share indicators for Brahma and Skol in their respective regions of strength only, right — that they've been moving in the right direction, that the gaps you were trying to close have closed. Can you give us an update on that — is the first question. And then the second question related to that is: do your premium and innovation efforts accrue a benefit to the quality image of your mainstream brands?

In other words, how do you know that what you're doing with Corona and the Michelob Ultra push that we just saw, and the quality image of those brands, is creating sort of a halo maybe over your mainstream category or not? Thank you.

Carlos Eduardo Lisboa, CEO AMBEV

Hey Laboy, nice to talk to you. And a pretty interesting angle that you are bringing again to our discussion here. I'm passionate about this topic because one big dream that we have at Laboy is exactly about reimagining the beer category — what the beer category can be. And by doing so, in the end, our role, our mission, is to bridge this future category image and the actual consumption, the actual portfolio that we have. The entire architecture, in the end, that we are building here has this, right, role for us.

So when you mention the premium, for sure, the premium, you know, enhances the image of the category. And by doing so, obviously you're going to see a halo effect in all segments. And whenever I do the same with the core and somehow we challenge the status quo with the core, we also see a halo effect in other segments. And this is the beauty about it. Everything that we are doing with balanced choices for sure brings new attributes for the beer category that make consumers see our category differently, better, stronger.

And that's the way we perpetuate, right, the relevance of the beer category, not only Brazil, but across our footprint. And we prepare the category to land in the future with the right attributes. So this is a very interesting question, right? And this is also related to the point when we bring the first pillar of our strategy, you know, Connecting, Lead and Grow, because we want to take this role — be the category captain in our markets. Okay, now connecting to Skol once, and I already mentioned this, you know, to you in our previous sessions.

One of the key challenges that we have is to develop these new partitions of the category without compromising the core. We want to add on top. We want to keep the foundation solid, healthy, and build on top. That's the way we're going to bring more consumers to the category. We're going to jump into more drinking occasions. And we avoid cannibalization. That's the game we are playing here. And that's why it's so important to keep core healthy. Okay.

When I reflect about the core performance — volume-wise in the quarter was broadly stable, which is good, good improvement versus last quarter, right. The performance is a consequence of our three brands performing a pretty interesting way, right. Among the three, Skol, after several quarters, you know, stable in equity, delivered the first quarter with equity improvement. So it's a pretty interesting sign, right? It's initial, but it's good to see, right.

Within the mainstream segment, all three core brands gained share, right, including Skol. Right. Within that — and I always consider Z our foot in the future. What are we going to see tomorrow in Brazil happening? Right. Skol was the core brand growing fastest, right, which is very interesting. We introduced Skol 00 line extension from the mother brand. The line extension achieved 20% of non-alcohol beer mix, which is also very interesting all together.

What I really like about the core performance, the mainstream performance, is something that we rarely discuss about, Laboy, because we always put emphasis on, you know, consumers trading up from core to premium. But from 2019 to today, right, the value segment in Brazil reduced by half in an industry standpoint. And that volume, right, was captured by the core. Another very interesting point for us to consider in our conversations moving forward.

And another big reason why it's so important to have more than one core brand, right, playing this game. Brazil is very different, you know, regionally speaking, right. As a consequence, our brands' performance is also very different across the country, right. And the complementarity of our mainstream portfolio today is a very important competitive advantage for Ambev. Thank you for the question.

Carlos Laboy, Analyst at HSBC

Thank you.

OPERATOR (Operator)

Our next question comes from Lucas Fejeda with J.P. Morgan. You can open your microphone, sir.

Lucas Fejeda, Analyst at J.P. Morgan

Hi guys. If I may, a question — a follow-up question on the net revenue per hectoliter and how to think about that line going to the second half. So, Lisboa, you mentioned a few factors, right, explaining that strong performance in the first half. When we look at the second half, especially when you compare year over year, is it fair to say that the delta year versus year should be larger in your mainstream portfolio? Because, if not mistaken, this is where you guys had more sort of troubles last year on the mainstream, and this year, like you've been mentioning, sort of things are back on track on the brand equity — most of the brand equities in the mainstream. So my question is how this mix affects. So should we see a higher delta year over year in the mainstream? And that obviously pushes your average prices down — is it fair to say? Or any sort of a price action is expected for the second half? Should we still be aiming this sort of inflation-plus scenario for second half? That's the question I have.

Carlos Eduardo Lisboa, CEO AMBEV

Thank you, Lucas. Thanks for the question as well. Let me clarify the following. Actually the main issue we had last year in the second half was not the mainstream performance — it was more the industry impact against 2024. Bear in mind that, you know, in 2024 there was a, you know, a weather phenomenon that impacted Brazil, right, El Niño, and created distortion in weather temperatures. Not a coincidence, but a consequence of that — well, 2024 was the peak of the industry in Brazil volume-wise.

When we had the weather change, especially in the second half of last year, is when the industry gap performance was created. And, you know, the mainstream segment has a, you know, for obvious reasons — and we discuss a lot about that, right — due to the relevance, you know, in some specific occasions like the on-premise, is a huge correlation with the industry performance. And this is exactly what explains the mainstream performance from our portfolio in the second half of last year.

So everything that we mentioned, myself and, you know, Flo, about second quarter and first half should be complemented with this information because we just cycled through the toughest comparison we had against 25 volume-wise. Now we are entering in a different, you know, kind of scenario, right. And, you know, based on the information that we have available from different, right, weather forecasts, right, institutes, there is no expectation whatsoever for even more adverse temperatures moving forward comparing to 25, right.

This is an important, you know, consideration to keep in mind. On top of that, we don't have any more that fluctuation share-wise, right. We kept our share level since Q3 last year pretty much stable, right — by the way, with some improvements. And that, you know, share-level performance is supported by a very solid share performance across all segments. And that should be, you know, somehow the shape we should expect from Ambev moving forward. That's why we are so, you know, confident about our portfolio momentum, right. And we stated that today we have the most complete portfolio that the company has ever had, because this is making a huge difference combining with the execution capacity and the digital capabilities that this company has developed along the previous years. So I think that's all I have to say about your point.

Lucas Fejeda, Analyst at J.P. Morgan

Thank you very much, Lisboa.

Carlos Eduardo Lisboa, CEO AMBEV

Thank you.

OPERATOR (Operator)

Our next question comes from Ben Thur with Barclays. You can open your microphone.

Ben Thur, Analyst at Barclays

Yeah. Good morning, Lisboa. Lira, thank you very much for taking my question. I wanted to follow up a little bit on the volume ex-FIFA World Cup implications. And clearly you've just laid out within your commentary what were the issues in the second half of last year affecting, obviously, volume on a year-over-year basis. So as you look at the second half in terms of particularly beer in Brazil, volume cadence, just try to help us bridge maybe what we should expect given it's a relatively easy comp, but obviously the World Cup's behind us.

How do you think about the performance of volume into the second half and then obviously moving into next year? Also with El Nino coming again, how much of a potential tailwind that could be. Thank you.

Carlos Eduardo Lisboa, CEO AMBEV

Thank you, Ben. Look, I cannot, you know, provide you any industry volume guidance, right. But what I can say is the following: comparisons versus 25, we are just cycling through, you know, a period when the industry declined, you know, mid to low single digit last year against 24, right. To semester when the industry declined high single digit against 24. I think that's the first part of the answer, right. Those drivers that historically impact positively the industry played the same role in the first half; it should play a similar role in the second half, namely population growth, employment and aggregate income, okay. On the other hand, we do see, which is a concerning sign, you know, household debt levels continue to be very elevated, right, which is a point of attention for us. But on the other hand, this is when we usually see our category resilience, because in the end, beer for Brazilians is a very accessible entertainment, right. And this is very, you know, important for us, especially in this kind of, you know, scenario.

Weather, right? Well, weather is a very difficult and tricky, right, aspect to predict, right. I'm not a weather expert here, right. So as I said, current external forecasts do not indicate any average temperature more adverse than last year. Right. Regarding El Nino, right. What I did, Ben, is the following. I was not here in 24. So we and the team, we revisit all the consequences that we lived and the country faced during the year, and there are very interesting learnings for us.

The first priority should always be around our people. Our experience in 24 reinforced the importance of protecting them and supporting partners and communities. There will be, probably, right, extreme weather changes across the country, different impacts. It is super important for us to be ready and be part of the solution and protect as well our operations. Second learning, potential impact on costs, right. Extreme weather conditions may also affect agriculture, commodities, logistic prices, right, input costs, right, and we are working closely with farmers and suppliers in order to be prepared to face that scenario.

On the demand side, right, 24 illustrated that warmer temperatures can influence industry demand, and that's exactly what I mentioned before. However, these effects are unpredictable. I'm not an expert; I cannot, we cannot rely on that. The only thing we can do is control what we can control and be prepared, be ready for, you know, a wide range of climate scenarios, right, and, you know, maybe, you know, if possible, continue to build, you know, even more resilient business moving forward.

And Ben, thank you very much.

Lucas Lira, Chief Financial, Investor Relations & Shared Services Officer

And Ben, just one comment here, just to reinforce what Lisboa said. If you go beyond the quarter, it's important to remember that we are very confident about what the industry can go. If I look into external drivers for Brazil and most of our emerging markets, population growth, rising income per capita, they should play favorably going forward. Also per capita consumption and what is on our side, as we both said, what we can control and what we're working on. We believe that beer is very connected to socialization and we are working to expand the boundaries of our category going forward. So we are, we are confident on what are the demographics and what goes in external and what we can do to expand the category going forward.

Ben Thur, Analyst at Barclays

Perfect. Thanks, Lira.

OPERATOR (Operator)

Okay, this concludes the Q and A session. I would like to invite Mr. Carlos Lisboa to proceed with his closing remarks. Please go ahead, sir.

Carlos Eduardo Lisboa, CEO AMBEV

So, before we close, let me share a personal reflection. This was my sixth quarter leading Ambev. And the environment, as we just discussed, has hardly stood still. Right. I believe great companies are defined by what they do and deliver. In periods like this, they usually sharpen their choices, strengthen capabilities, and turn challenges into opportunities, right. I feel privileged to lead Ambev and to work alongside people, you know, whose talent and ownership make that possible.

There is always way more to do. But I believe Ambev is stronger today than when I began the journey as CEO. We are entering the second half confident in our strategy, energized by our momentum, and ready to capture the opportunities ahead, and determined to keep building an even better company in the future. Thank you for joining us today.

OPERATOR (Operator)

This concludes today's presentation. You may disconnect and have a nice day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.