Good morning, and thank you for waiting. We would like to welcome everyone to Ambev's Third Quarter 2013 Results Conference Call. Today with us, we have Mr. João Castro Neves, 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 both risks and 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 Q3 2012 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 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. Nelson José Jamel: Thanks, Maureen. Hello, everyone, and thank you for joining our 2013 Third Quarter Earnings Conference Call. I will give an overview of the…

[Operator Instructions] Our first question is Antonio Gonzalez, Credit Suisse. Antonio Gonzalez - Crédit Suisse AG, Research Division: Actually I just have 2 quick questions. First, on the share merger, could you please just confirm for us that the increase in the capital reserve and the capital stock accounts relative, comparing Ambev S.A. versus Ambev affiliates today is roughly the increase -- the combined increase in those accounts is roughly BRL 90 billion? And also, if you can give us any update on the appointment of the 2 independent board members? That's my first question. And then just secondly, very rapidly, is there any color that you can share maybe on the evolution throughout the quarter of volume trends in Beer Brazil? I recall last conference call you mentioned that July started better than the second quarter and then I guess as the quarter progressed, we saw some weakness. So maybe you could just share how the quarter evolved and, obviously, taking into account October data from SICOBE is on the rather weak side. Is there any comment that you can make to reconcile those October numbers from SICOBE with your maintained guidance for full year 2013? I understand there's not a perfect correlation there, but just to hear any update you might have would be really helpful. Nelson José Jamel: Sure, Antonio. This is Nelson. I'll start talking about the service structuring. And then João will take the question on volumes. So as we announced it last quarter, an important milestone for us because the registration confirmation from CVM. And as a result, we expect the company should be listed around mid-November. And after that, there will be a couple of steps that we still have to follow, right? So after the listing, we'll be able to call for…

Our next question is Fernando Ferreira, Bank of America.

I had 2 questions. The first one would be on the tax rate. I just wanted to understand how much this new provision in Argentina impacted your effective tax rate, and I assume this will be a recurring factor going forward. And then related to the same question, you guys stopped paying -- you'll see you're right and expect now that you will start paying again after the approved transaction. So I just wanted to confirm that. That will be my first question. Nelson José Jamel: Okay. Fernando, this is Nelson. So regarding our effective tax rate, what we had in Q3 was we had in fact of a new law that was passed in Argentina, pursuant to which we're going to have from now on a 10% withholding tax on earnings generated within the country. And the fact that we have to recognize in Q3 not only the 10% over the -- only generated in the quarter, but also for all the retained earnings and the [indiscernible] pay dividends in the country made it, of course, a bigger impact. So as disclosed in our press release, there was a BRL 135 million accrued expense, but most of it refers to previous quarters' results, so retained earnings. Before, if you think of the impacts moving forward, of course, how about the last [indiscernible] 135 [ph] because these are months refer to one generation, I think, early 2012, which have not been distributed so far. So it was an accrued expense without a cash impact because it will come over time and it was a much bigger impact then what one could expect for the following quarters, right? Regarding now you'll see, as you know, you'll see is the most efficient way to return tax to shareholders. But had we declared, [indiscernible] Q3 and that was also the trend in Q2, what we've [indiscernible] EBITDA would have generated a tax law carryforward, which will not be used. It's going forward because of the standing restructuring, corporate restructuring that we have. So that's the reason why we did not declare it neither in Q2 nor in Q3. But this should be resumed as it concludes the corporate restructuring and that is where the sort of guidance we can give at this stage.

And then I had a second question, more strategic one, related to Brazil. We've continued to see a more focus on pricing and price mix over the last 2 years. So my question would be what's your view as the consumer is able to take much more pricing for beer going forward, and do you think the -- what about this -- the elasticity of demand now. Do you think that has changed after the price increases or not really? Nelson José Jamel: I think João has mentioned that we always trying to get to the right balance between price and volume. Okay. And you're right, I mean, when you look at 2011, 2012, indeed a new price was there, but volume was still healthy. As we went into 2013, we talked about this in the first quarter, that was the worst quarter we ever had with a minus 7, minus 8 type of declining industry in our own business. And we replan the commercial strategy for the year with a better Q2, and I'm not happy with what happened to the Q3. And I think we're going through a phase where I think we have a chance of being able to get a more balanced price and volume equation which with more volume and that's price going forward. I mean, that's something that we want to have a better balance going forward and I think 2014, given the macro environment, given the World Cup, as you can imagine, I mean, as I said in the speech, I mean, we continue to be very positive on 2014 and that's why we have the CapEx. From a macro standpoint, the macro is better than what it was in the beginning of the year. That continues to improve. Federal government with the…

Our next question is Lore Serra, Morgan Stanley.

I wanted to go back a little bit and touch upon some of the themes that have been asked already, but I'm just trying to understand the transition into the third quarter and kind of what that means for the pricing and competitive environment. So you are likely, I suppose, in the midst of taking pricing in September ahead of the news on the excise taxes and, obviously, the positive news there gives you a lot of flexibility. But can you comment on as you're trying to take pricing up and the volumes are so weak, particularly for some of your competitors because we've seen some reporting. What's your level of confidence on 2 things? One is that you can sort of land a normal price increase into the year end as you typically do? And then second, that the competitors who are following this, as opposed it's always tough to know what competitors will follow, you always have that lag, but with competitors down as much as 8% and you sort of wonder whether or not they will kind of say, look, we just can't take as much pricing and you see a less disciplined market than we've seen year-to-date. So if you could comment on those 2 things, I'd really appreciate it. Nelson José Jamel: Sure, Lore, it's Nelson. Thanks a lot for the question. I think we probably read the same reports from 2 of the list of competitors in Brazil and then one talking about high single-digit decline and the other one talking about minus 70 or 70% decline in EBIT [ph], I mean, that's not -- that's a tough combination. So I think actually we report pressure both ways, I mean, different pressure by the volume and by the results, right? So that, I think,…

[indiscernible] sure, like, as you look into next year -- I am not asking about the fourth quarter because it's too tight, right? But as you think about what's happened this year and you think about the category and the competition and the environment, and you think about your policy of pricing with inflation. Is there any reason to think that some of that has changed as you look into 2014, in terms of what you're seeing right now? Nelson José Jamel: Well, what I try to answer in the first part of the question, and I do appreciate you trying to fine-tune this. I think a couple of things. What I'd like to say, if I think first, competition in the -- the industry is less competition is pressured by everything, not just us. And given the results you just mentioned, it seems like other people may be even more pressured than we are. Okay, from [indiscernible] results. So that's point number one. I think second, so let's say, positive. I think the macro, the World Cup, the election, of these goal for industry, for us, for industry, price in line with inflation, if we can do that next year, I think that's a super positive versus '11, '12 and '13, where prices went above inflation because of taxes. So if this so-called sweet spot that we're reaching for the fourth quarter and things will move on, people are always talking about the multiplier for April 1, that's already a sweet spot further than just the fourth quarter. So with competition, our industry is still under pressure from external factors such it affects commodity. Second, with the macro being positive. And third, with the open insured by the federal government to discuss a better balance. If that combined, leads to pricing in line with inflation, that will be the first time in 3.5 years. So I think that would, for sure, help volumes in 2014.

And if I could just ask a quick financial question to Jamel. The financial expenses keep rising from a lot of these gains from nonderivative instruments that are particularly large. Can you just give us -- I don't know if there's a simple explanation why they were so high this quarter? Nelson José Jamel: Sure, Lore. We -- what we have impacting this quarter results are losses that are mainly related to FX, and yes, they're connected to exposure, each generated a [indiscernible] corporate transactions that have a lot of confidence abroad. And also our cash management policy. So as long as we have, let's say, volatility in the financial markets, that's the sort of result we can have. But it was particularly more relevant this quarter. Some of it is linked to other than the corporate transaction, so there is no economical loss. At the end of the day,. you have the negative impact on our financial results, but there is a counterpart in our equity. But because of FX opportunities [ph] in separate places, so -- and also part of it is that real loss in connection to our cash management policy.

Our next question is from Lauren Torres from HSBC.

Curious to get your thoughts, I'm not sure if you're able to answer this question, but your thoughts on the excise tax looking into next year. It seems like a lot of your comments with respect to the environment are still rather cautious. And I was curious if you think there's a possibility that some of this excise tax will be withheld next year, and that can actually work as a benefit for you, if that does occur? João Mauricio Giffoni de Castro Neves: Sure. Let me try to give a little bit more details on what we said previously on the speech. I mean, further excise taxes did went up on April 1. They did not at all on October 1, which is great news, as we said, because in respect of FAS rule to consumers, it will not be required. We cannot speak, of course, for the whole industry as a whole here, but we welcome a lot to the federal government decision, because it's indicative that they are open to find this alternative stuff that I'm referring to. There is a possibility of a win-win without further increase of the tax burden for the industry, which brings long [ph] and brings investment, brings less pressure for inflation. So without the crystal ball, I think we can refer to things that already happened, okay, so fact. Fact is that 2010, there were no tax increase whatsoever, so there is another year where that happened, but [indiscernible] here, right. Last year, there was normal supplier in October. This year there was normal supplier and no tax table, showing them there is room to talk, right. So government is open to talk, they want to fix the economy, they want to fix the industry, want to get to a better place. So I cannot guarantee anything, of course, but I mean, we've been doing this for now, 4 or 5 years. And we had some wins, we had some losses, and we will work every day in order to -- for this to continue going forward and find this win-win situation for everyone, consumers, government, the company. And as I said, it did happen before.

Okay, that helps. And can you also just address the SG&A reduction in the quarter. You mentioned that the commercial spend was lower than what you had in the first half. I was just curious if you could talk about that a little bit more. And as we think about next year, if there's room to improve on that SG&A line, and kind of what those improvements could be? Nelson José Jamel: Nelson here. Yes, we mentioned that our expectation for the year is to have SG&A growing the inflation which, of course, would imply in a much better performance in the second half versus what we showed in the first half. And, actually, whether [indiscernible] with the results we showed today. I see part of it has lesser merits between quotes, if you will, because we knew that we're front loading part of the marketing investment. And so one of a facing issue with the investment behind what seems a consideration cut. So it's a kind of a natural improvement. But on the other hand, as you once said, I mean, since the beginning of the year, we saw a very tough year ahead of us. And we went back to all the detailed analysis of the featured cost in the seclusion basis cost. Then we took actions that in the course of the second and maybe the third quarter we could see the benefits. So we expect much to come in Q4. And as we move into 2014, is that, we think, it's too a little bit early to give any sort of guidance there. But we, of course, did that again not only have the full year impact of the things we are realizing along the way this year, but also to pursue new alternatives. I mean, as you know, we always mention [indiscernible] in the cost of operation, redesigning profits, have been increased and has continued to increase the impacts of the procurement scene in terms of increasing corporates and aligning purchase, revenue a lot on e-auctions. So all that is in the pipeline. Again, there is no silver bullet. As you know, we have been in this journey for a long time. But we are confident that we can control average and improve operational average by managing our costs in an even more efficient way.

Okay. And if I could just last -- I guess, any visibility or any comments on commodities for next year, particularly, grains, if you're seeing anything different? Nelson José Jamel: We also think it's a bit early to talk about 2014, let's say, sort of guidance for commodities and effect. I mean you know our hedging policy in place, so we have it locked, most of it. And that's not going to be a surprise to anyone when we announce by year-end that they want to have a year-over-year negative impact coming from current. But at the same time, come watch that indeed much better than what they were, let's say, 12 months ago. So the net impact we're going to see probably a less negative impact than what we saw this year. But we'll come back with what is split guidance as we close the year.

Our next question is Alan Alanis, JPMorgan. Alan Alanis - JP Morgan Chase & Co, Research Division: Two questions. The first one has to do with this per capita consumption in the premiumization process we're seeing in beer in Brazil. I mean, moving from 4.5% to 7% of total mix in the superpremium category, that's a huge increase in terms of that category, clearly, more than double-digit solid in each of the years. How do we reconcile that such accelerated growth within the context of volume -- total industry volume decline? And that's, I guess, the first question. And the second question regarding -- I understand the excitement of continue growing per capita consumption, but we're already seeing levels, particularly, in the south and southeast of Brazil, where the level of per capita consumption is resembled with levels of United States. I mean, are we seeing -- is it right to think that in the south and southeast, it's just mainly a process of premiumization and that's why you're seeing the double-digit growth in superpremium brands, and in the north and the northeast is where the main opportunities will rise in terms of per capita consumption? Or there's more going on into these trends? João Mauricio Giffoni de Castro Neves: I'm Joao, and a very good question. I think the easier part of the answer is that, of course, I mean, we're still an emerging nation. We are still somewhat borders. There's a lot of more per capita income that I think this country will get in the next 10, 15 years. So I think it's a positive outlook. So I think that's the easy part. I'm sure you're talking more about the next 12 to 24 months. So talking about the long term, I see no doubts about it.…

Our next question is Alex Robarts from Citi.

Two questions. Going back to more of the short-term situation here with you guys. First question on operations, second on a nonoperating item. But I appreciate the wording that you're using, the short-term environment remains challenging, and we have had some macro trends improving recently, but it seems in the shorter term, we've seen a little bit more irrational competitive behavior. You're kind of guiding now to an industry decline in beer Brazil towards the low end, kind of minus 3%. And we have a very difficult comp year, probably one of your toughest year-on-year in the fourth quarter. And just trying to understand here, and all the visibility is low, but can you help us kind of get a sense of you've been talking all year about pack price, RGB, one issue; second, the premium segment; third, the north to northeast. Which one of these 3 things seems to really be working better than the other? Are they all working the same? And how should we think about the effectiveness of these initiatives that you've been kind of working on all year as we've come into this being in the critical fourth quarter period with visibility very low? And if the answer could also kind of touch on this idea of -- to the extent that you seem to be straitjacketed by this idea that SG&A can't grow beyond inflation. And that means no growth for SG&A in the fourth quarter. I mean, you have a volume capital-intensive business. Might it make sense to kind of increase the SG&A in this fourth quarter? So that's kind of the first question. And then I have a nonoperating one as my second one. João Mauricio Giffoni de Castro Neves: This is Joao. So trying to review our situation in the short…

Yes, I mean, I guess, I see the folks in that when I talk about the competition, scurrying to get the key volume footprint here ahead of the World Cup, and it seems to me what you're saying is that you would be okay to sustain, I guess, 70 basis points was the market share loss in the third quarter in beer. But you'd be okay to lose more share in the fourth quarter at the expense of hitting this guidance with flat or below inflation SG&A for the year, is that a safe statement? João Mauricio Giffoni de Castro Neves: No, not sure exactly what you meant. So I'd rather give you my view on this, right? Okay. So, I mean, we always look at market share, in conjunction with volume pricing, because our primary challenge in terms of our top line is to strike the appropriate balance between volume, price, mix and market share. We believe that despite the 5% volume decline, we are averaging 68% in the third quarter, which nearly flat versus the second quarter and well within the 67% to 69%, while delivering the 6% net revenues per hectoliter, with the growth of [indiscernible]. That's as much our role, and not for anything regarding that I would be happy, which I would not be, by further losing market share in the fourth quarter, right? I mean, that doesn't make any sense, okay? So what makes sense is I'm happy to be well within the 67% to 69% and 68% and the fact that we're nearly flat versus the second quarter with the price increase that we mentioned that happened during the third quarter, right target, we didn't expect it and delivering the 6%. That's what I believe.

Got you. Okay, and fair enough. And the nonoperating question is really on a tax question. I mean, this kind of foreign subsidiary offshore tax, right, I guess, there's a deadline as you know in a couple of weeks, kind of to declare, maybe come forth to the government's tax amnesty proposal. As I understand, Ambev's liability here is roughly BRL 2.6 billion. You haven't made a provision. I guess, your lawyers were saying it's a, I think, a possible claim or negative outcome. How are you thinking about this? Or will you go ahead and participate in the government tax amnesty program regarding offshore profit and then kind of engaging from payment and provisions? Or do you feel like the legal strategy right now? Not to participate and kind of go and adjudicate this in the court? Nelson José Jamel: Alex, it's Nelson. I think you mentioned probably right. We have an exposure in September 30 of possible BRL 2.7 billion and all the related details of the exposure is part of our disclosing both financial and public filings. And as you also mentioned, we have made no provision based on the opinion of our legal costs. I mean, we're just doing in the absence of those courts, and even in case, we will not prevail, the [indiscernible] to litigate the matter in the judicial courts as we believe that our position is very strong, and it should prevail. Remember that we already had a second set what ruled in favor and brought the original exposure down to BRL 2.7 billion. And referring to the federal tax amnesty program, which is being administered by the federal government, we were able to take that decision, the publication, await final publication of the final terms and conditions of the policies ascribed and the appropriate course of action. But given the strength of our legal case, of course, we wait to see what are the specific terms coming up. But at this stage, of course, no position can be safe.

Our final question will be Gustavo Oliveira, UBS.

I have a question regarding the overall capacity to utilization that you may have and also the system knowing that volumes are going down and everyone have been adding capacity. It seems that the market is expecting [indiscernible], given by the affinitive [ph] et cetera. But could you put yourself in a situation where the value brand's performing very poorly next year and you also -- because you don't have price, you have such a high capacity in July, which should lead it to like a very pressured prices, and therefore, your premium volumes may not be able to offset all that, and therefore, you won't be -- you won't have any operating leverage next year. It seems that when we look at your impressive results in 2013, part of it is coming from the premiumization strategies and the premiumization volume that's been accelerated. But do you foresee a scenario like that? Or you're very comfortable in your capacity utilization, in your value brands, not only yours, but the industry capacity utilization churning out? That's my question. Nelson José Jamel: Let's see if I understand your question. I'm assuming that you're calling value the mainstream, right, I mean, would already [indiscernible].

Not only you, but I mentioned that most of your competitors -- especially your competitors have been adding a lot of their mainstream brands. But I did tell you have a very strong premium portfolio. Would it affect your business? Nelson José Jamel: Well, let me give you my view. I mean, what's -- I think pricing has been driven much more by cost pressure and cost pressure, I would include dollar and tax, but also state and federal taxes. I think price comes from 2 places. Comes from disposable income, of course, from consumers. I mean, that's the ultimate pressure. But I mean, people also look at what's happening from an inside cost perspective which has been very strong, right, in this last 12 to 18 months. I think we will be, in both cases, in a better situation in 2014, actually. I think the macro will be better, I think the macro and the micro, both things will be better. I think there will be less pressure from both the internal cost pressures on a delta year-over-year type of a situation. And therefore, sometimes, the capacity monetization could be unaffected. I don't think it is this year, and I don't think it will be next year, okay? So, I mean, actually, I thought the question was more coming from how do we feel about the capacity utilization, what I mentioned, what I answered previously that I think we are going forward with a better footprint we ever had. So I think the capacity utilization is more a positive than a negative, because we're getting closer of being able to sell every type of portfolio that we would like to across the country rather than the opposite. So I like the fact that we have that. I think, second,…

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. Nelson Jamel for any closing remarks. Nelson José Jamel: Thank you, all, again, for joining today's call. And we're looking forward to speaking with you again on our Q4 and full year 2013 call. We're going to have the opportunity to discuss with you guys our performance on what to expect to be an even stronger finish of the year. Thank you very much, and bye-bye.

The conference is now concluded. Thank you for attending today's presentation, you may now disconnect.