Lots of companies suffered due to the pandemic, and their share prices have plunged drastically. However, this doesn’t always mean that this company won’t rebound. Ambev is the largest beer manufacturer in Latin America. This Brazil-based company has operations in 17 nations in the region as well as Canada.
The ongoing recession in Latin America, as well as the challenges brought by the novel coronavirus, adversely affected Ambev. According to its CEO, Jean Jereissati Neto, the pandemic damaged Panama, Bolivia, and the Dominican Republic the most. Those countries adopted on and off-trade opening hours in alcohol sales ban. And they had more severe restrictions on people’s circulation as well.
While Brazil suffered significantly, in Argentina, Paraguay and Chile’s economic losses were less. Even though Canada volumes benefited in the short term due to the pantry loading, it has been challenging for the company to manage through the pandemic.
In early May, Ambev released the first-quarter 2020 results, reporting 2 cents earnings per share for the quarter. That result missed the experts’ estimate of 4 cents. Net revenue lowered by 1.6% while volume plummeted down by 5.6%.
As a result, the company’s shares lowered rapidly during the last months. They traded over $7 in March 2018. However, by January 2020, the stock dropped to $4, and in March, it plummeted down to an all-time low of $1.90. Despite that, Ambev has recently recovered and now trades around $2.68.
What do analysts think?
According to experts, Ambev has the potential to gain significantly in the future. But they also warn to expect volatility in the shares.
Anheuser-Busch Inbev has a majority ownership in Ambev. Their beer brands include Skol, Antarctica, Brahma, Presidente, and many others. Ambev also offers proprietary carbonated soft drinks, along with non-alcoholic and non-carbonated beverages.
Furthermore, the corporation is among one of the largest independent bottlers of PepsiCo. Its relationship with PepsiCo began in the late 1990s, and the current agreement runs until 2028