Budweiser Brewing Co

Welcome to the 2026 First Quarter Results Announcements Conference Call for Budweiser Brewing Company, APAC Limited. Hosting the call today from Budweiser APAC is Mr. Y.J. Chung, Chief Executive Officer and Co-Chair of the Board, and Mr. Bernardo Novick, Chief Financial Officer. The results for the three months ended 31st March 2026 can be found in the press release published earlier today and available on the Hong Kong Stock Exchanges and Budwise APAC 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 of 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 Budweiser PAC actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in this forward-looking statement. Budweiser PAC is under no obligation to and expressly disclaims any such obligation to update the forward-looking statement as a result of new information, future events, or otherwise. For a discussion of some of the risks and important factors, that could affect Budweiser PAC future results, the risk factors in the company's prospectus dated 18th September 2019, the 2025 annual report published, and any other documents the Budweiser PAC has made public. I would also like to remind everyone that the financial papers discussed here today are provided in US dollars unless stated otherwise. The percentage changes that will be discussed during today's call are both organic and normalized nature unless otherwise stated. Percentage changes refer to comparisons with the 2025 full year. Normalized figures refer to performance measures before exceptional items which are either income or expenses that do not occur regularly as part of but widely packed 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 2026 first quarter results can also be found in the press release. It is now my pleasure to pass the time to YJ. Sir, you may begin.

Thank you, Ray, and good morning, everyone. Thank you for joining today's call. We enter 2026 with a clear focus on recovering volume through disciplined execution across our market. For about APAC, total volume returned to a positive growth supported by continued strong momentum in India. In China, our increased investment shows sign of progress. With the quarter-over-quarter volume decline tightening further, as we remain committed to our strategies of enhancing our e-home route to market, enriching our portfolio, and innovating behind our mega-brand to rebuild momentum. In South Korea, we gained much share in both on-premise and e-home channels. Before we go over financial results, I wanted to take a moment to introduce Fernando Nowick, our new chief financial officer, effective from April 1st this year. Nowick joined ABI Group in 2009 through the global MBE program and has worked across various functions in multiple markets. He brings deep finance and global resource allocation expertise having these projects delivering savings and a meaningful value creation. I'm pleased to welcome him to the BUD APAC team. Let me now hand over to Novik for a brief introduction.

Good morning, everyone. I am delighted to join the BUD APAC team. I would like to thank you, YJ, for your trust and invitation to join the team. I joined AB InBev 16 years ago and spent five years in finance roles, five years in commercial roles, and five years in innovation roles, where I led the corporate venture capital arm in New York. Most recently, I was responsible for our global capital allocation division reporting to the global CFO. I hope I can bring this experience to growth by APAC business in a profitable way. I have already had the pleasure of meeting some of you joining the call today. and I look forward to meeting many more in the next weeks and months ahead. Let me share our financial results for the first quarter of 2026 in more detail. In the first quarter, APAC volume returned to growth, even if it's just 0.1%, after many quarters driven by strong growth in India and a sequential improvement in the industry and our volumes in China, with volume decline narrowing quarter over quarter. This progress was driven by both enhanced execution as well as increased investment across channels and our portfolio, which added temporary pressure to our bottom line. We also maintain strong brand momentum in South Korea, despite a soft industry and a challenging comparable last year. In India, we continue to advance premiumization, delivering strong double-digit volume and revenue growth. In summary, for BAT APACs, total volumes increased by 0.1%, revenue and revenue per hectolitre decreased by 0.7% and 0.8% respectively, normalized EBITDA decreased by 8.1%, while our normalized EBITDA margin contracted by 246 basic points. Now, let me cover some of the highlights from each of our major markets. In China, Volumes decreased by 1.5%, improving sequentially, with a quarter-over-quarter decline continuing to narrow since the second half of 2025. Revenue and revenue per hectolitre decreased by 4% and 2.5%, respectively, impacted by increased investment to support wholesalers and activate our brands in the in-home and emerging channels. Normalized EBITDA decreased by 10.9%, impacted by our top-line performance and increased investments. We continue to make progress in expanding our distribution in the in-home channel while increasing the distribution of our premium brands. This premiumization is more clear in the online to offline or O2O channel, which grew strong double digits in the quarter. Now let me share with you some of the investments we are making on our brands through our marketing campaigns, as well as liquid and package innovations to better connect with our consumers across more locations and increase sales momentum, particularly in their home channel. On Budweiser, we accelerated the national expansion of Budweiser Magnum, building on its strong consumer traction and sustained sales growth. In March, Budweiser Magnum launched an integrated nation one campaign anchored by a strategic partnership with global football icon Erling Haaland and the FIFA World Cup Mega Platform to drive geographic and channel expansion. Regarding our Harlequin family, we introduced Harbin 1900, celebrating its brewing heritage as the birthplace of Chinese beer. Positioned in the Core Plus segment, which is the RMB 8-10 price range, this new innovation is 100% pure malt classic lager, pairing the synthetic vintage packaging with a rich, authentic taste. The launch reinforces Harbin's role in driving innovation and placing new bets in this growing and important 4++ segment. In South Korea, volumes decreased by low teens and revenue decreased by big single digits, mainly due to a challenging comparable in the first quarter of last year, driven by shipments facing ahead of a price increase, that if you recall, was in April 2025. Revenue per hectolitre, on the other hand, increased by low single digits, also comparing with the first quarter last year before the price increase. This led to a normalized EBITDA decreasing by low teens. Having said that, we maintain a good commercial momentum in both in-home and on-premise channels and we foresee a recovery in the second quarter. Finally, India continues to grow and will play a bigger role in our footprint. Industry momentum continued in the first quarter, and we gained total market share. We delivered strong double digit volume and revenue growth, led by a strong growth in our premium and super premium portfolio. We also continue to see momentum in the moderation agenda, with states like Maharashtra and Karnataka introducing changes that decrease the current relative tax advantage of hard liquor versus beer. We see this as a step in the right direction and a sign that some states understand the importance of evolving towards an alcohol tax policy that are consistent with global policy standards, where high alcohol products are taxed higher than low alcohol products, like beer. And with that, YJ and I are here to answer any questions that you might have.