AB InBev

Welcome to Anheuser-Busch InBev's third quarter 2023 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michelle Dukaris, Chief Executive Officer, and Mr. Fernando Tenenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab and the Reports and Results Center page. Today's webcast will be available for on-demand playback later today. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. If you should require operator assistance, please press star 0. Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, See risk factors in the company's latest annual report on Form 20F filed with the Securities and Exchange Commission on the 17th of March, 2023. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michelle Dukaris. Sir, you may begin.

Thank you, Jessi. and welcome everyone to our third quarter 2023 earnings call. It is a great pleasure to be speaking with you all today. Just a heads up, I'm slightly under the weather and I'm taking the call remotely. Apologies in advance if my voice is a little rusty. Today, Fernando and I will take you through our third quarter operating highlights and provide you with an update on the progress we've made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with our operating performance. Our global momentum continued this quarter, although was partially offset by the performance of our US business. We delivered revenue growth of 5%, with our net revenue per hectolitre increasing by 9% as a result of pricing actions, ongoing premiumization, and other revenue management initiatives. Total volumes declined by 3.4%, as growth in our Middle Americas, Africa, and APEC regions was primarily offset by performance in the U.S. and a soft industry in Europe. EBITDA increased by 4.1% and reached 5.4 billion U.S. dollars. Underlying EPS was 86 U.S. dollar cents, a two cents per share increase versus last year. In line with our capital allocation priorities, we have announced the 3 billion U.S. dollars bond tender. And we have also announced it today that will be proceeding with a $1 billion share-by-back program to be executed within the next 12 months. Fernando will provide some additional detail on this capital allocation choices later in the presentation. While the operating environment remains dynamic in some of our markets, the strength of our global footprint, brand portfolio, and our continued focus on disciplined resource allocation are enabling us to invest for the long term while delivering efficient, profitable growth. We delivered broad-based growth this quarter, with both top and bottom line increases in four of our five operating regions, and with revenue growth in more than 80% of our markets. Our scale and diverse geographic footprint, with leading positions in the largest profit and growth pools has us well-placed to deliver superior long-term value creation. Now, I will take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America. In the US, the beer industry remains resilient, delivering revenue growth of 3.3% this quarter. and with beers gaining share of value of total alcohol in the off-premise. Our revenues declined by 13.5% and STR volumes by 16.6%, primarily due to volume decline of Bud Light and impacted by shipment phasing ahead of our October price increase last year. With respect to Bud Light brand performance, we have actively engaged with over 260,000 consumers since April, and their common points of feedback remain consistent. One, consumers continue to want the Bud Light brand to concentrate on the platforms that all consumers love, and we are doing just that through investing in partnerships with the NFL, Folds of Honor, news platforms, college football, and our recently announced return to partnering with the UFC. Two, they want Bud Light to focus on beer. The Bud Light East to Summer, East to Sunday campaigns are all about bringing people together over a beer for the moments that matter. Notably, a recent survey found that over 40% of lapsed Bud Light drinkers said that they are now more open to come back to drinking Bud Light. Third, they want their beer without a debate. We are taking the feedback and working hard to earn our consumers' business every day across the world. While our total beer industry share declined by 515 bits this quarter to 36.6%, it has been stable since the last week of April through mid-October. U.S. EBITDA declined by 29.3% this quarter. Similar to last quarter, approximately two-thirds of the decline was driven by market share performance, and one-third driven by productivity loss and the strategic choices we made to increase sales and market investments in our brands, and provide support to our wholesaler partners. As we move forward in the U.S., we are focused on what we do best, brewing great quality beer, actively engaging with our consumers, supporting our partners, and positively impacting the communities that we serve. Now, moving on to our largest region, Middle America, which delivered margin expansion and another quarter of growth. In Mexico, we delivered mid-single-digit top and bottom-line growth. Our above-court portfolio continued to outperform, led by the strong performance of Modelo Especial and Pacifico. We continued to progress on our digital initiatives with our Vendo platform in BIS, now enabling digital utility payments. and mobile data purchases in more than 9,000 points of sale and generating over 170,000 transactions in the third quarter. As we highlighted at our recent capital markets day, Mexico is an example of the performance that can be delivered with effective execution across all three pillars of our strategy and implementation of our replicable toolkits. In Colombia, our business delivered double digit top and bottom line growth. Our core portfolio led our performance this quarter, with a particularly strong performance from poker, which grew volumes by high single digits. In South America, our business in Brazil delivered mid single digit top line and double digit bottom line growth, with margin expansion of 628 basis points. Our beer volumes declined by 1.1% as we cycled all-time high quarterly volumes in third quarter 2022. Our premium and super premium brands led our performance, delivering a volume increase in the low teens. Now, let's talk about EMEA. In Europe, we grew top and bottom line by no single digits. Volumes declined by high single digits, outperforming a soft industry in more than 80% of our key markets, according to our estimates. We continue to drive premiumization across Europe. Our premium and super premium brands delivered mid-single-digit revenue growth this quarter, led by Les and Stella Platt. In South Africa, we delivered double-digit top-line growth, with our portfolio continuing to gain both share of beer and total alcohol. EBITDA grew by mid-single digits, as top-line growth was partially offset by anticipated transactional effects and commodities headwinds. Our core portfolio continued to outperform, delivering high single-digit volume growth. And our global brands, led by Corona, grew volumes by more than 35%.

And finally, APAC.