Shares of Ambev S.A. (NYSE:ABEV) staged a dramatic recovery on Thursday, climbing more than 5% from their session low after the Brazilian brewer reported a surge in second-quarter operating cash flow that overshadowed mixed revenue results. The ADRs closed at $3.09, down just 0.5%, after touching an intraday trough of $2.93.
The bounceback came despite revenue and EBITDA falling short of analyst projections. Normalized profit rose 23.3% to R$3.49 billion, beating consensus estimates by about 15%, according to brokerages including XP Inc. (NASDAQ:XP) and Citigroup (NYSE:C). Organic normalized EBITDA increased 8.9%, while organic revenue grew 6.1%.
However, the headline cash-flow figure commanded the most attention. Operating cash flow jumped 54.5% year-over-year to R$4.71 billion. A Reuters analysis of company data revealed that working-capital improvements accounted for 79% of the R$1.66 billion increase. Payables contributed R$1.51 billion in cash inflows, while inventory shifted from a R$457 million source of cash to a R$220 million use.
Cash flow before working-capital changes rose only 1.3%, or R$80 million, signaling that the bulk of the improvement may be temporary. Lower capital expenditures also provided a tailwind to free cash flow, which the analysis estimated at R$3.83 billion, nearly double the prior year's R$1.96 billion.
"The consistent execution of our growth strategy translated into another quarter of beer volume growth, with solid top and bottom-line performance," said CEO Carlos Lisboa. Brazil Beer, the company's core segment, posted 5.0% volume growth, 8.9% revenue growth, and a 12.8% rise in normalized EBITDA, with margins expanding 110 basis points.
Premium beer volumes surged approximately 25%, while no-alcohol beer grew 30% and the balanced-choices portfolio doubled. The company's digital platforms also expanded: BEES marketplace gross merchandise value jumped 58%, and Zé Delivery GMV rose 16%, with premium brands accounting for about 35% of the latter's volume.
Results were more mixed elsewhere. Brazil non-alcoholic drinks saw a 4.4% volume decline but a 13.8% EBITDA increase, aided by lower sugar and packaging costs. Central America and Caribbean volumes expanded 5.4%, but margins contracted 90 basis points. Latin America South and Canada both experienced volume declines, though EBITDA inched higher in both regions.
Revenue comparisons were dampened by currency translation and scope changes, with reported net revenue rising just 0.3% to R$20.15 billion. Reported EBITDA increased 3.6% to R$6.38 billion. XP analysts Leonardo Alencar and Leonardo Paiva noted that revenue came in 4.5% below their forecast, while EBITDA missed by 3.3%, but net profit exceeded their estimate by 15.5%.
Ambev returned approximately R$5.9 billion to shareholders so far this year and has nearly completed a share buyback program authorized in October 2025. The board authorized an additional R$1.1 billion in interest on capital, with another R$1.9 billion installment due October 6. The company maintained its full-year outlook, projecting a 4.5% to 7.5% increase in Brazil Beer cash cost per hectoliter, excluding third-party marketplace products; the second-quarter increase was 4.5%.
Risks remain. The working-capital benefit could reverse if payables return to normal levels. Cash selling and administrative expenses rose 10.7%, and volumes declined in three of six business units. Fluctuations in currency, weather, and Argentine inflation could also affect reported comparisons going forward.
