Budweiser Brewing Co

Welcome to the 2025 Nine Months Results Announcement Conference Call for Budweiser Brewing Company, APAC Limited. Hosting the call today from Budweiser APAC is Mr. Y.J. Cheung, Chief Executive Officer and Co-Chair of the Board, and Mr. Ignatius Larus, Chief Financial Officer. The results for the nine months ended 30th September 2025 can be found in the press release published earlier today and available on the Hong Kong Stock Exchanges website. and Budweiser APAC's websites. Before proceeding, let me remind you that some of the information provided during this results call, including our answers to your questions on this call, may contain statements and future expectations and other forward-looking statements. These expectations are based on the management's current views and assumptions and involve known and unknown risks, uncertainties, and other factors beyond our control. It is possible that the Budweiser EPAC's actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Budweiser EPAC is under no obligation to, and expressly disclaims any such obligation to, update the forward-looking statements as a result of new information, future events, or otherwise. For discussion of some of the risks, and important factors that could affect Budweiser APAC's future results see risk factors in the company's prospectus dated 18th September 2019 and the 2024 annual report published and any other documents that Budweiser APAC has made public. I would also like to remind everyone that the financial figures discussed today are provided in U.S. dollars unless stated otherwise. 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 the same period in 2024. Normalized figures refer to performance measures before exceptional items which are either income or expenses that do not occur regularly as a part of a Budweiser EPAX normal activities. As normalized figures are non-GAAP measures The company disclosed the consolidated profit, EPS, EBIT and EBITDA, on a fully reported basis in the press release published earlier today. Further details of the 2025 nine-month results can also be found in the press release. It is now my pleasure to pass the time to Y.J. Sir, you may begin.

Thank you, Rick, and good morning, everyone. Thank you for joining our call today. Our performance in China has been challenged over the past few quarters, as our results have not delivered on the full potential of our brand and organization. While the overall industry has been impacted by a soft economic cycle, which has been even more pronounced in our footprint and a mix of channels, we have recognized clear opportunities to enhance our route to market and portfolio execution to better align our results to our capabilities. As a company of owners who strive every day for operational excellence with our customers and consumers, we have been working in China to rise size inventories and allocate resources. We have a clear view of where to improve. Our priority is to reignite growth and rebuild our market share momentum. We are moving with speed, focus, and discipline to ensure that our business turns stronger, more efficient, and better positioned to improve over time to outperform for the long term. I will now hand it over to Yige to provide more on our performance in the first nine months and the third quarter of 2025. Thank you.

Thank you, YJ, and good morning, everyone. In the first nine months of 2025, total volumes decreased by 7%. Revenue decreased by 6.6%, while revenue per hectolitre increased by 0.4%. Our normalised EBITDA decreased by 7.7%, and our normalised EBITDA margin contracted by 37 basis points. In the third quarter, total volumes and revenue decreased by 8.6% and 8.4%, respectively, with ongoing challenges in China partially offset by our performance in India. Revenue per hectolitre increased by 0.1%, driven by a positive geographic mix in India and revenue management initiatives in APAC East, partially offset by our performance in China. Our normalized EBITDA decreased by 6.9%, impacted by our top-line performance, while our normalized EBITDA margin expanded by 46 basis points. Now let me discuss some highlights for each of our major markets. In APAC West, in the first nine months of the year, volumes and revenue decreased by 7.9% and 8.7%, respectively, while revenue per HECF leader decreased by 0.8%. Normalized EBITDA decreased by 9.7%. In China, volumes in the third quarter decreased by 11.4%, impacted by continued weakness in our footprint and on-premise channels. Revenue decreased by 15.1%, while revenue per hectare decreased by 4.1%. Impacted by increased investments behind innovations and brand activations, as well as efforts to expand our in-home presence, coupled with an adverse brand mix as we managed inventories. Normalized EBITDA decreased by 17.4%, impacted by our topline performance and operational deleverage. On that note, as YJ mentioned earlier, we have a clear view of where we look to improve in China and how to achieve this. Accordingly, we are focused on improving our topline performance through the following areas. further strengthening our route to market with an elevated focus on the in-home channel across online, offline, and O2O. Increasing investment in our mega brands such as Budweiser, Carbon, and Corona to win in the premium, core plus, and super premium segments now and as the industry recovers. Leading innovation within the industry across packaging, brands, and liquids to increase category participation and develop new consumption occasions. expanding our footprint through targeted geographic expansion, and restoring our excellence in execution. We made further progress in our channel expansion strategy in the third quarter, focused on premiumizing the in-home channel as in-home consumption occasions continued to develop. In the first nine months of the year, the contribution of the in-home channel to our volumes and revenue increased as we began to extend our distribution within this channel. On the portfolio side, we continue to invest in diverse marketing campaigns and innovations to further increase the brand power of our portfolio, connect with consumers across more occasions, and increase sales momentum. Corona expanded its signature drinking with lime ritual from bottles to cans with the launch of a full open lid can design, which further reinforces the brand's differentiation and appeal. This innovation is now rolling out across online and retail channels to expand Corona's reach in in-home drinking occasions. Budweiser introduced Budweiser Magnum in a one-litre can, broadening its consumer reach with a greater in-home presence while retaining its striking black and gold design. The new packaging format further highlights the brand's distinctive brewing and aging process, as well as its unique flavour. On the digitization front, the usage and reach of Bees, our B2B wholesaler and customer engagement platform, continued to expand. As of September 2025, Bees was present in more than 320 cities across China. We continue to leverage technology to further enhance our commercial capabilities, optimize our route to market, and strengthen our customer relationships. While our performance in China has been disappointing, our businesses in South Korea and India have continued to deliver solid results. In India, in the third quarter, we delivered double-digit revenue growth which translated into a strong EBITDA performance, further compounded by the lapping of additional costs incurred in the third quarter of last year on projects to enhance the digitization and integration of both financial and non-financial information. In the first nine months of the year, the Budweiser brand continued to grow ahead of the industry, with the volume and revenue of our premium and super-premium portfolio increasing by double digits. In APAC East, in the first nine months of the year, volumes decreased by 0.5%, with revenue and revenue per hectolitre increasing by 1.8% and 2.3%, respectively. Normalized EBITDA increased by 0.3%, with our EBITDA margin decreasing by 46 basis points. In the third quarter, volumes in South Korea were flattish, as we continued to offset ongoing industry weakness by outperforming the industry in both on-premise and in-home channels. Revenue and revenue per hectare leader both grew by mid-single digits, driven by our ongoing revenue management initiatives and a positive brand mix. Meanwhile, our EBITDA and EBITDA margin expanded substantially, supported by a strong commercial performance and commodity tailwinds. We increased our commercial investment to bolster our competitiveness in the lead-up to Chuseok, one of the key selling periods in South Korea. From a portfolio perspective, we also unveiled recently KAS All Zero, South Korea's first non-alcoholic beer to emphasize a 4-0 concept of zero alcohol, zero sugar, zero calories, and zero gluten. And with that, YJ and I are here to answer any questions that you may have.