May 7, 2019 / 6:47 PM / 2 months ago

UPDATE 1-Brazil's Ambev in stronger position to benefit from economic recovery -CEO

(Adds details and market reaction to earnings)

By Gabriela Mello

SAO PAULO, May 7 (Reuters) - Brazilian beverages firm Ambev SA has emerged from the country’s economic recession in a stronger position to compete in the beer market and is increasingly betting on premium brands to drive volumes up, executives said on Tuesday.

“Despite some macro volatilities, we believe very confidently that we are in a stronger position to fully benefit from an economic recovery”, Ambev’s Chief Executive Officer, Bernardo Paiva, told analysts in a call to discuss quarterly results.

He added premium brands currently represent 11 percent of total beer volumes in Brazil and Ambev sees a growing trend in this segment.

“Premiumization is a portfolio game and our innovation portfolio is full”, said Paiva, highlighting the successful launch of Skol pure malt in January.

Chief Financial Officer Fernando Tennenbaum warned that pressure from costs of goods sold should persist over the next few months, but the brewer is likely to keep general, sales and administrative expenses under control.

In Argentina, the Latin American unit of Anheuser Busch InBev sees a challenging environment ahead, but no “formal price controls” so far.

“We are used to operating in markets like this and the long-term outlook in Argentina is still positive,” said Paiva.

Ambev shares were trading 3 percent down in the afternoon at 17.52 reais, after Ambev posted a quarterly net income of 2.749 billion reais ($692.74 million), 6.2 percent up from a year ago.

Analysts at BTG Pactual said operational figures were broadly in line with expectations, but highlighted lingering structural concerns on top line growth.

“Although the real sustainability of Q1’s volume rebound remains somewhat unclear to us, we would expect the market to give the benefit of the doubt, which should mean that the stock could continue its year-to-end outperformance for another while,” analysts led by Thiago Duarte wrote in a report on Tuesday. (Reporting by Gabriela Mello Editing by Chizu Nomiyama)

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