Good morning, and thank you for waiting. We would like to welcome everyone to Ambev's Fourth Quarter and Full Year 2012 Results Conference Call. Today with us, we have Mr. João Castro Nevis, CEO for Ambev; and Mr. Nelson Jamel, CFO and Investor Relations Officer. We would like to inform you that this event is being recorded. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature and, unless otherwise stated, percentage changes refer to comparisons with Q4 and full year 2011 results. Normalized figures refer to performance measures before special items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company discloses the consolidated profit, EPS, EBIT and EBITDA on a fully-reported basis in the earnings release. Now I'll turn the conference over to Mr. Nelson Jamel, CFO and Investor Relations Officer. Mr. Jamel, you may begin your conference call, sir. Nelson José Jamel: Thank you, Mike, and hello, everyone. Thanks for attending our 2012 Fourth Quarter and Full Year Earnings…

[Operator Instructions] And the first question we have comes from Lore Serra of Morgan Stanley.

I guess, I wanted to just start out, João, if you could give us a little bit of your perspective on sort of the market right now in terms of how well your pricing actions last year in September, October have been absorbed in the market? How much you see competitors sort of following the pricing? And then how you think about this year, I mean, you mentioned in a number of the comments in the call but we will see an environment this year with less increase in minimum wages. And I think embedded in your guidance is the view that you can do sort of with the consumer level low double-digit pricing in order to meet that guidance. So how you're thinking about that, what you're seeing and how we should think about that for this year? That would be helpful. João Mauricio Giffoni de Castro Neves: Okay, great. Lore, thanks for the question. I mean, I'm actually -- we feel very, very positive about the current pricing environment. We mentioned high single for the net sales per hectoliter and double digit for total top line, okay? So that's a little bit of a difference. But the pricing momentum is very positive. And I think the 2 reasons to feel that way, I mean, first, is the fourth quarter volumes given all the pricing that we had in the third quarter, which saw the full impact in the fourth quarter and the quarter being a very good one on the volume and/or the combination. I mean, we're always looking for the right balance of price and volume. I think we had a good one, a better one in 2012 and a very good one in the fourth quarter before we started 2013, excited, given that we accomplished what we wanted for the end of the year. And second, I mean, I think given that the market is becoming more and more formal, we're seeing, maybe for that reason also, a much greater followship. I mean, followship is above average, okay? So the combination of a strong volume in the fourth quarter, the confirmation of pricing is sticking. Some consumer resilience, if you want, and then pricing followship above average and therefore now, 3 months, 3 consecutive months of either neutral or positive share gains, which are putting us strongly into our desired range of 67 to 69, but actually being above 68. I think the whole combination of pricing and share we have started -- ended 2012 on certainly a good foot, which therefore puts us in a good one for the beginning of 2013.

Perfect. And I know that you gave a lot of information in terms of your cost outlook. I guess, it was a bit higher than expected in terms of the COGS pressure. Is there any concern that you have in terms of differential kind of trends versus the market as you head into 2013? I mean, I suppose I would've guessed that the commodity part of it would have helped you more, and I just wonder what that means as you think about the market dynamics in 2013? João Mauricio Giffoni de Castro Neves: Sure. I actually think -- I think from a competitive marketing environment, I see an overall positive. I mean number one, ending up the year with the plane moving up, with more formality, which is true for beer and true big time for soft drinks. And then on top of that, everyone feeling the same thing, not just from tax, even more from taxes and the same one from the hedges. I see no reason -- because we are very close to the average. Jamel mentioned the numbers and can get into the details of the average, but the average are even slightly better than what you see in the -- for people that are buying spot. So I see people either mimicking our sort of policy or buying spots. So the ones that are buying spots are even buying more expensive than our average hedge rates. So I see the pressure to be equal or greater for both taxes or COGS when compared to us, competition versus us. Nelson José Jamel: I think just to add one point, Lore. I think in terms of our COGS guidance, as you mentioned and asked, I think it's important to emphasize that, of course, we have -- the biggest hit is coming from the currency evaluation as part of our hedging policy, as João mentioned. And that's, again, partially offset by commodities, which we were able to hedge at most favorable prices. And I think it's also important to distinguish what we're going to see in beer from soft drinks. Let's say beer being 80% of our business in Brazil, we feel more comfortable about the overall dilution of our results. As we said, we are guiding for a high-single digit net revenue. We think total Brazil could be between high-single and low-double digit but beer should be more towards high-single. So we should have sort of a, as João mentioned, double-digit top line growth in beer, with gross margins therefore given the outlook we gave, following the same pattern. When you go to soft drinks there, because not only of the currency impact but also some changes in terms of tax credits we have on raw materials, they recognize more of a pressure. And that's what we try to emphasize that only, I'll say, 20% of our business will be more of a gross margin pressure. But it's not the case for beer.

And next, we have Bob Ford with Merrill Lynch.

I guess, with respect to the offsets, right, if I'm doing the math correctly, it seems to me that if you get a high-single-digit price increase in Brazil and that if Felipe's representation on the ABI cost, correct, right -- that 60% of your COGS in Brazil are dollar linked, then you should have no difficulty maintaining margins. Am I missing something, or is there greater brand investments, or other things that could adversely impact the outlook? João Mauricio Giffoni de Castro Neves: Yes, Bob, it is -- the guidance we give regarding currency we had last year. So the 1.6 is 60 flagweight [ph] in our COGS. And for this year, it's going to be around 1.93, is already locked, right. So on roughly 40% of our COGS, we should be more precise, we have this currency valuation impact, which accounts for, for you to have an idea, at the EBITDA margin level for Brazil as a whole, that could take away roughly 180 bps of our margin, right? That alone...

Right. But that's only -- but that would be a 14% drag on 40% of COGS, right, for a 65% gross margin business when you blend it. It's a little bit more than that, now if I'm not mistaken, just off the top of my head. It seems to me that high-single-digit pricing will more than compensate for this. Nelson José Jamel: Yes, for sure for soft drinks we think we're going to have more of the pressure like I just said in the previous question to Lore because there, we could have high-teens. So that will be one of the pressure. But definitely for beer, we're going to have much less of a pressure in terms of gross margin. And if we think in absolute terms, if we think of double-digit top line growth, we could also think of double-digit gross margin growth for beer, if you will. That's, I mean, the basic math on the calculation we are providing or the guidance we are providing, sorry. But for soft drinks, again, that should be more of a pressure for us.

And the soft drinks, that's primarily due to the juice component, right? There was a favorable treatment for some juice-based beverages, and that disappears even if you used it as like a -- lemon and -- Pepsi with lemon and that sort of thing, is that correct? João Mauricio Giffoni de Castro Neves: Well, in fact the lemon and guarana raw materials, they have an impact on the net revenue, because they have a higher excise, has this benefit of having natural flavors has gone up with a -- discount. What really is affecting COGS is the combination of currency as well, but also tax creates some concentrates and incentives that we have in raw materials that was shortened by 1/3. So that's going to drive us from the high-single to the -- in fact, the high-teens growth in COGS.

That's very helpful. Then one last question that is when you look at the informal or the Tubaína section of the marketplace, how much of your market share do you think you've taken from the Tubaínas, and what kind of an opportunity do they represent for you going forward? João Mauricio Giffoni de Castro Neves: Bob, this is João, thanks for the question. Well, I think as we look -- I mean, if we look at the last 12 to 18 months, since we launched the 1 liter returnable and since the Tubaínas have been more under pressure from the tax reform, I think the combination of SICOBE on them for the last 18 months and the changes in the tax regulation that João just mentioned, combination of the juice law and the Manaus tax incentive will put even additional pressure on them. We probably already took between 50 to 100, if you want, basis points. And I think there is 2x, 3x of that looking out 2, 3 years ahead. So I think there's much to be done as an opportunity for our flavor brands and the core brands we have both Guaraná, Paso and Pepsi to even take more space. If we think about, I think we mentioned, our main competitor had launched returnable glass bottles about 8 years ago. We give them a lot of space for many years. We decided to stop that. About 1.5 years ago we started with very good results. And I think the future is bright in terms of being able to capture more share coming ahead. So your question is right on the target.

The next question we have comes from Alan Alanis of JPMorgan. Alan Alanis - JP Morgan Chase & Co, Research Division: Well, I have a couple of questions. The first one has to do with working capital. I mean, before putting the question, I think, it's a congratulation for Jamel and his team. I think it's the sixth consecutive year that you have working capital improvement as a percentage of sales and I'm seeing it as a record level of 24%. So the first question has to do -- do you think that, that kind of improvement can continue in 2013? And then I have a question for João on a different topic. Nelson José Jamel: Sure, Alan, thanks. Indeed when we think of our working capital, this is something we have been focusing on for 3 or 4 years now. And of course, the low-hanging fruits are not there anymore but have been consistently improving our performance, while managing our accounts receivables, inventory levels but mainly our payables. And I think there are still opportunities there to be captured. We always like to think about it like when we think of CBB for instance, we have been practicing [ph] for more than 10 years now and year-after-year and 2012 was no different, was an important contributor to our results as well. We're always learning and doing better, so we think we can still do much better in terms of our working capital management. And that's, of course, is heading up, show our ability to keep up and then make a strong free cash flow, right? So we think the company can do even better in 2013 as well. Alan Alanis - JP Morgan Chase & Co, Research Division: Good. That's very useful. And then a quick question for João.…

The next question we have comes from Enrico Grimaldi of BTG Pactual.

My question is related to your statement in your release. I mean, you said the first quarter of 2013 should be challenging, mainly due to an earlier Carnival and a slightly poorer weather, right? I understand the reasons you mentioned that, the way they can impact in your first quarter, but I would just like to understand the size of the impacts. I mean, are we talking about flat volumes in the first quarter, decreasing volumes or just there's small growth? And also, is this problem related to the sell-in or the sellout of the beer because as far as we can tell, the industry have a strong production level in January, right? So if you could elaborate a bit more on that, I would appreciate. João Mauricio Giffoni de Castro Neves: Sure. For sure, let's try to elaborate a little bit more on that. We had some, let's say, reports on Monday, which affected the way people are looking at things. We'll not answer precisely in terms of what is the exact number for the quarter for the obvious reason. But what we can say first is that January was a very strong month for the industry. However, since January was positively impacted by the inventory-building to be ready for February, which is the earlier Carnival. We cannot treat January figures as a proxy for the remainder of the year, okay? So it's actually the opposite from what was in the Brazilian press. But having said that, we expect the beginning of the year to be challenging because of the early Carnival and a lot of the rain in 2 very important regions, mostly the southeast of Brazil. So anytime the Carnival commences earlier, this will have an impact on the first quarter. It's early to say how much but that's why we said among all the quarters in Brazil, we expect this one to be the most difficult one. But again, that doesn't change our view for the year given that the fundamental drivers of the industry, pricing, disposable income and weather. And on top of that, Confederations Cup, which is something that never happened in the custom [ph] for which we've been preparing for the past couple of years. We believe this will change a little bit the potential prospective. So therefore, no material changes in our view.

And the next question we have comes from José Yordán of Deutsche Bank. José J. Yordán - Deutsche Bank AG, Research Division: My first question was asked, but I wanted to also ask you about the reclassification of Peru and Ecuador into LAS. You could have done this when you exited the active management of Venezuela. You could have done it, I suppose, when you took over CND last year and I was just curious as to why now, and should we be reading anything into your future strategy in Central America, which is, I guess, the remainder of HILA-ex as a result of this change right now? João Mauricio Giffoni de Castro Neves: Okay, José, thanks for the question. I mean, you almost answered for me, but I'll detail a little bit. I mean, basically, given that the acquisition was done in May, it would be very awkward to do the change during the year. You never know when an acquisition is going to be finalized. We had thought about this change actually for a couple of years. Many times, when I moved to Latin America South, we thought again when -- not because I'm moved back but because when there were changes in the zone presence on the beer [ph] leaders of the region, we thought about it. We didn't think it was the right timing back then. But now that we have already won major business and therefore business unit that has the potential of $200 million, $300 million, $400 million, we think it's enough to take away and there are some synergies by putting Peru and Ecuador close to Chile and Bolivia. So the synergies were there. But now, we are doing a couple of things that is the right timing to move. And what you…

The next question we have comes from Alex Robards of Citi.

I guess, I wanted to start off first on this challenging first quarter reference in the press release. I heard your answer just now, and I was just -- I mean, I was just wondering the first quarter of last year had a couple of things as well. You increased your SG&A with the Carnival and -- in the northeast there in Salvador, and it seems also that your hedge will be still favorable in this first quarter. Am I missing something or -- I mean it seems to me that those 2 things would make it so that it perhaps would offset some of this rain and the inventory buildup, or if you could comment a little bit more on that, that would be great about the first quarter? I guess, the second question I had really relates to the soft drink. It's interesting how the industry grew slower in Brazil than beer. And I was hoping you could kind of give us some color about that differential and specifically on soft drink, is it only -- are you only seeing share gains from the informal B brands or not? And the third and final thing, obviously, we think that there's probably going to be a conclusion to the acquisition of Modelo in the coming months. And if you could give us any color of what that might mean, or any comment what that might mean for you guys vis-a-vis brand launches or geographical reconfigurations within the structure of your company that would be great. João Mauricio Giffoni de Castro Neves: Okay, well, both Jamel and I will take some of the questions. Let me start with the last one. I think Modelo, there's very little to comment. Of course, this is more for ABI and whenever they are…

Very helpful. Just to clarify, the 1.93 on the hedge, does that kick in, in the first quarter or is it safe to assume that given your kind of -- your activity, your period of 9 months to 14 months that perhaps that starts to kick in more in the second quarter? Nelson José Jamel: It will be a ramp-up. So we're going to be, of course, below 1.93 in Q1 and by year end, for instance in Q4, it's going to be above 1.93. So that will be -- the average is 1.93 and is growing in line with what we saw in the spot rates last year as part of our hedging policy.

And the next question we have comes from Lauren Torres with HSBC.

My question is on product and brand mix. This morning, InBev spoke a lot about in Brazil, in beer focusing on domestic and international premium brands, and I was hoping you could talk a bit more about that with respect to skewing maybe more out of mainstream into premium and how directionally that, that's working for you. And as we think about margins and how that helps the bottom line, just curious, if volume growth maybe isn't that dynamic, it's more of the upside coming more in the value end of the equation. João Mauricio Giffoni de Castro Neves: Lauren, it's João. We mentioned a couple of quarters ago, maybe a year ago that we thought we could double the size or the weight of the premium brands within the total portfolio. I mean, it used to be not many years ago, it was around 5 and then it declined to 4 with all the growth from mainstream in 2009 and 2010. So we went from 4 already to 6 within 1 year or 1.5 years, so we are pleased with the rapid growth. And we ended the fourth quarter even higher. Therefore, we think we are -- we're then on our way of doubling from 4 to 8 within 3 to 4 years. So that's the first good news with both international and domestic growing and therefore trading up from consumer. It's very positive from the volume equation, but also it's been very positive from the total macro perspective. I mean, with greater macro for most part and therefore already having a positive impact, both in net turnover per hectoliter and also macro but even greater, which I think is more important at the end of the day on the total macro. So great combination of pricing and volume and strong -- developing stronger brands along the way, giving a positive upside, current and perspective upside on total macro for the next couple of years.

But could I interpret that as we'd see the lift from mix becoming more substantial over time rather than just driving pricing, absolute price -- increases in Brazil? Nelson José Jamel: Yes. Lauren, it's Nelson here. That's exactly the point when we guide for instance for our high-single-digit growth for top line. Part of it is pure pricing, what we normally do to manage inflation. But the upside normally comes from either direct distribution increase but strongly now from premium brands' growth as well. So that's standing on top of inflation our net revenue and I think it's important to add on what João just mentioned, we are growing so well with Budweiser, for instance. We are going to open up for a new brewery to produce Budweiser in Brazil. So that's part of that BRL 3 billion CapEx that we announced. So we move it for -- in the beginning year -- or in the end of 2011 for a more Southeast and south sort of distribution. Now at this stage, 2013, we already opening up for the entire country, of course, focusing on the main cities. And that's what we are going to be building our capacity by having Budweiser and another brewery as of this year.

Okay. And if I could just ask one other question. I know you can't be specific on M&A, but obviously, ABI going after Modelo and you having done CND. Opportunities maybe in other markets outside of Brazil for you, is there anything worth talking about or looking at, at this point that as we think about consolidation in other parts of Latin America, you'd be able and willing to engage in? João Mauricio Giffoni de Castro Neves: As I think we said in the other question, there are no comments on inorganic but we've been -- I think, the same -- the acquisition shows that we continue to be very active south of Mexico. I still think there's a lot of things to be done but no specific comments.

Next, we have Robert Ottenstein of ISI.

In the outlook statement, when you're talking about expecting a record year of capital expenditures, you have a little hedge in terms of subject to the level of federal excise taxes. Is there any particular reason for putting that in? Is there anything going on, on the excise tax side that would indicate any new issues there? João Mauricio Giffoni de Castro Neves: No. No new news. I mean, it's something that we have always said and we continue to say so. I mean, I think what we look for in 2013 is stability. And we believe this stability will be in place and given that the stability in getting that we look at 2014 as a very strong year. We rather say that but we think what's out there is what's going to be.

Great, that's good news. And then the other one that I'd like a little clarification on. When you're talking about Brazil COGS, for the quarter, you noted that you had a higher-than-expected was a result of higher-than-anticipated mix of more expensive of one-way volumes. Can you talk a little bit more about that? Why it was higher than expected? What the various drivers were there? João Mauricio Giffoni de Castro Neves: You mean specifically for the -- the comments regarding fourth quarter, right?

Right, right. João Mauricio Giffoni de Castro Neves: Well, I think the point here is what we have done in the past 4 years was really strengthening a lot, not just our returnable glass bottle business but also trying to enhance also the consumer experience at the bar. We see -- I mean, Nosso Bar, micro events, those are all ways for you to have even a better consumer experience. Therefore, the people go out of their place and meet their friends as is the usual occasion in Brazil for that to happen. I think especially in the past 4 years, that's not true for 2009 and 2010. I think 2009 and 2010, we did a good combination of RGB and one-ways. And then in 2011 and 2012, we focused much, much more on the RGB. I think a fine-tuning, a little bit of a fine-tuning on that was also to go back to the end. So continue to go very strong, even stronger behind the RGB and the consumption occasion at the bar. Also introducing more RGBs in the offtrade through the pit stop and also now, with the convenience pit stops. But giving some room for the offtrade also to grow, so -- sorry, for the one-way also to grow. That's why, I mean, by just putting -- you remember that we were able to postpone the taxes from the fourth quarter to April and then also moving from 4 years to 6 years, we mentioned that we were going to put some of that money that was postponed back in the marketplace and as we saw that, we some more opportunities of the one-way to grow and we let it happen and by that, we learn how to better execute the one-way a little bit better and therefore, we see also opportunities in the one-way going forward. And also remember that in occasions, such as World Cup and Confederations Cup, many times, is desirable and sometimes it's the law for you to sell one-way presentations rather than glass presentations. So for that, we are also making sure that we have the right footprint also for the one-ways going forward.

Terrific. And just as a follow-up on that. How pleased are you with the rollout of the 300 at this point? Do you have any metrics around that, that you can discuss? João Mauricio Giffoni de Castro Neves: Yes. I mean, we're seeing -- everything that we wanted to happen in 2012 happened. Well, first in terms of total volume, if you want, so I mean, we got to 2 million hectoliters. We got to the coverage where we wanted to be. The coverage was looking more towards off trade than the on trade. Therefore, we have already also approved new lines and new plants in new parts of the country. So I don't want to give too much information, because they are sensitive and confidential. But very pleased and it actually is one of those things that helps you in volume, pricing and share. And you don't find many of these all the time. So you when you find them, you better execute them well and rapidly.

Well, at this time, we'll go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Nelson Jamel for any closing remarks. Sir? Nelson José Jamel: All right. Thank you, Mike, and thank you, everybody, for joining us today. I'm looking forward to speaking with you again on April 30, and have a nice day. Thank you.

And we thank you, sir, and also to Mr. Neves for your time. The conference call has now concluded. At this time, you may disconnect your lines. Thank you all for joining, and have a great day.