(Adds details from conference call, financial results)
By Ana Mano
RIO DE JANEIRO, July 29 (Reuters) - Ambev SA, a subsidiary of beverage company Anheuser Busch Inbev SA, missed quarterly profit estimates and gave up on expanding sales in Brazil this year, sending its shares to their lowest point in nearly seven months.
Ambev now expects that its Brazilian net revenue this year will be unchanged from 2015, down from a previous estimate of single digit revenue growth, according to a securities filing.
Brazil's largest brewer posted an 18 percent decline in second-quarter net income from a year earlier to 2.046 billion reais (US$623 million), citing rising operating and financial expenses. It missed a Thomson Reuters consensus estimate of 2.66 billion reais.
Shares fell 3.14 percent to 18.83 reais in afternoon trading in Sao Paulo.
The company is likely to struggle for the next two quarters as Brazil grapples with its worst recession in eight decades, executives said.
"Brazil will get back on track in the medium to long term," Chief Executive Officer Bernardo Paiva said during a conference call on Friday to discuss earnings.
He said sponsorship of sporting events, including the Olympics and the launch of the nationwide returnable bottles campaign, should help "build momentum" to restore market share over the coming quarters.
Ambev's share of the beer market in Brazil showed a positive trend in the second quarter, but remained below last year's levels, the company said. Beer sales in Brazil account for almost half of Ambev's consolidated beverage sales at 4.7 billion reais, and volumes dropped 4.5 percent in the quarter, the company said.
Despite a challenging short-term scenario in Brazil, especially high unemployment, the company hopes "to start 2017 in much stronger shape than this year and even the year before," Paiva said.
Cost of goods sold per volume rose 9.8 percent in the quarter while sales volumes dropped to the their lowest in the period since at least 2013.
Financial expenses more than doubled to 900 million reais due to losses on currency hedges and interest expenses related to a sale option on an investment in the Dominican Republic.
The company also said sales, general and administrative expenses rose 5.8 percent to 3.1 billion reais in the quarter as AmBev spent more on marketing initiatives related to the Olympic Games to be held in Rio de Janeiro.
Net sales, or total sales minus sales taxes, rose 4.7 percent to 10.377 billion reais on growth in the Caribbean, Central America and Canada. Earnings before interest, taxes, depreciation, amortization and one-time effects, or adjusted EBITDA, rose 2 percent to 4.205 billion reais. ($1 = 3.2892 Brazilian reais) (Reporting by Jeb Blount and Alberto Alerigi Jr; Editing by David Gregorio and Phil Berlowitz)