(Adds details from call with analysts, updates share price)
By Gram Slattery
SAO PAULO, March 1 (Reuters) – AmBev SA, the Latin American unit of beverage company Anheuser Busch InBev NV , expects solid margin growth in 2018 as disposable incomes rise and unemployment drops in Brazil, its chief executive said on Thursday.
“We are very confident that we have a solid plan to expand EBITDA growth,” AmBev CEO Bernardo Pinto Paiva said in a call with analysts following the release of the company’s fourth-quarter results.
“I think that the prospects for the country are better in 2018 than 2017, so the prospects for growth are solid,” he said. Brazil is AmBev’s largest market.
In a securities filing, the Brazilian brewer said it posted net revenue adjusted for non-recurring items of 4.51 billion reais ($1.39 billion) in the fourth quarter, sending its shares up over 2 percent.
While that revenue figure was below a Reuters consensus estimate of 4.86 billion reais, it was still up 23.2 percent from the same period last year, reflecting a rebound in the Brazilian beverage market that appears to be gaining steam.
The company also posted guidance that was light on specifics but generally sanguine about 2018, while noting that the first quarter could be challenging for various reasons, such as the timing of Brazil’s Carnival holidays.
“While AmBev fell short of our expectations, we believe investors will be encouraged by the notable (year on year) and (quarter on quarter) improvements and positive outlook,” analysts at UBS wrote in a note to clients.
AmBev was at 22.44 reais a share in afternoon trading, after shooting up more than 3 percent after the opening of the market.
Holding back profits in the fourth quarter was a significant increase in general and administrative expenses, which the company largely attributed to increased compensation as its results improved. Sales, general and administrative expenses grew 15.7 percent in the quarter from the year before.
Still, margins were solid, with the company posting fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of 7.3 billion reais, roughly in line with a Reuters consensus estimate of 7.25 billion reais.
AmBev said it will continue to emphasize its premium beers segment, reflecting the evolving tastes of Brazilians, while also investing heavily in marketing.
$1 = 3.25 reais
Reporting by Gram Slattery
Editing by Will Dunham and Paul Simao