Anheuser-Busch InBev SA/NV

Welcome to AB InBev's full year 2025 earnings conference call and webcast. Hosting the call today from AB InBev are Mr. Michelle DeCarris, 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 touchstone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star then 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 ABE embeds actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in these forward-looking statements. For 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 March 12th, 2025. 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. Michele Dukaris. Sir, you may begin.

Thank you and welcome everyone to our full year 2025 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, We'll be happy to answer your questions. Let's start with the key highlights for the year. In 2025, we executed our strategy with discipline, delivering another year of dollar-based EPS growth, continuous margin expansion, and solid pre-cash flow generation, even as we navigated a dynamic consumer environment. As we reflect on the year, we are encouraged with the consistency of our financial performance, the durability of our strategy, and the resilience of our business. While near-term demand across many CPG categories was impacted by a constrained consumer environment and unseasonable weather, we continue to invest in our strategic priorities. We remain disciplined in our revenue management choices, and delivered a bit of growth within our outlook. We continue to make progress this year. We strengthened our operating model and increased our portfolio brand power. We also formed new long-term partnerships to extend the reach of our brand and deepen the connection to our customers. The momentum of our growth priority continues. Our mega brand and premium portfolio grew ahead of our overall business. The growth of our beyond beer and non-alcohol beer portfolios accelerated, increasing revenue by 23% and 34% respectively. And this marketplace Gen Z increased by 61% to now reach $3.5 billion. Solid free cash flow generation enabled us to increase the size of our share-by-dex program, pay an interim dividend and proposed a final dividend that combined represents a 15% increase versus last year. And further, it strengthened our balance sheet. We added 2025, which improved momentum across many of our key markets. And we entered 2026 well-positioned to engage consumers and accelerate growth. Turning to our operating performance. While our overall volumes for the year were below potential, momentum across many of our key markets accelerated through the fourth quarter, which improved volume performance in December. The combination of our disciplined revenue management and portfolio of mega-brands that commanded premium price drove a revenue per hectolitre increase of 4.4% this year, resulting in top-line growth of 2%. Our productivity initiatives more than offset transactional effects had leads to drive an immediate increase of 4.9%, with margin expansion of 101 basis points. The strength of our diversified geographic footprint enables us to navigate the current environment and deliver consistent profitable growth. Revenue increased in 65% of our market this year. and we deliver EBITDA growth in four of our five operating regions. Our footprint also positions us well to capture a disproportionate share of future industry growth with a diversified mix of currencies. Around 70% of our EBITDA is generated in emerging and developing markets. that are projected to account for more than 80% of the beer category while in growth through 2029. Now, I will take a few minutes to walk you through the operational highlights for the year from our key regions, starting with North America. In the US, our business continues to build momentum, and we gained its share in both beer and spirits in 2025. Our BIA performance was led by Nicola Boutra and Bush Light, which were the top two volume share gainers in the industry. In the old BIAs, our portfolio growth accelerated. Revenue increased in the high 30s, led by Cutwater, which grew revenue in the triple digits. While industry volumes were below trend in 2025, we are encouraged by the start to 2026. Beer industry volumes and revenues grew in January. And later this year, we look forward to celebrating the 150 years anniversary of Budweiser and activating the category at the FIFA World Cup. This past weekend also provided us a good opportunity to engage with our consumers in one of the most watched live sporting events in the U.S., the Super Bowl. We continue to invest behind our brands to fuel momentum, and the creativity and effectiveness of our marketing was once again recognized by consumers. Budweiser, Michelob Ultra, and Bud Light were named as three of the top 10 ads according to the USA Today Ad Meter, with Budweiser taking the top spot for the second year in a row. Now, let's turn to Middle America. In Mexico, our business momentum continues, delivering a mid-single-digit stock and bottom-line increase, with our both-core beer portfolio leading our growth. In Colombia, record high volume and margin expansion drove double-digit EBITDA growth, with revenue increasing across all price segments of our portfolio. our momentum improved in the fourth quarter as we gained market share and our volumes returned to growth in December as weather normalized. Our premium and super-premium beer brands delivered high-tinged volume growth in 2025 and gained share to now lead the premium segment. In Europe, market share gains and premiumization partially upset the soft industry. with performance driven by our mega brands and non-alcohol beer. In South Africa, our momentum continues, with market share gains in beers and beyond beers, and disciplined revenue and cost management, driving mid-single-digit top and bottom line growth. Now, moving to APAC. In China, revenue declined by low teams, with our volumes underperforming a more stable lead. as we adjusted inventory levels and focused areas to better reflect the channel and geographic shift. In Q4, our market share trend improved to be flat versus last year, driven by improvements in Budweiser brand power and our in-home channel performance. As we move forward, we continue to focus on rebuilding momentum and reigniting growth. Now, I would like to take a few minutes to reflect on the beer category and progress we have made in executing our strategy. Let's start with the category. Beer plays an important role in bringing people together and creating moments of celebration, and we believe beer has a long runway for future volume growth across our footprint, supported by favorable demographics, economic growth, and opportunities to increase category penetration. According to IWSR, the beer and beyond beer category is forecast to continue to gain share of alcohol beverages in 2025, and has now gained more than 200 basis points since 2021. In looking ahead, beer is expected to grow volumes globally, and continue to gain share of alcohol beverage. In 2025, we invested $7.4 billion in sales and marketing and have averaged more than $7 billion per year since 2021. Our marketing effectiveness continues to strengthen, and our mega-brand and mega-platform approach were key contributors to the brand power of our portfolio. reaching a record high in 2025. Our mega brands led our growth and have increased its revenue at a CAGR of 10% since 2021 and now represents 57% of our total revenues. We are the leader in the premium beer segment globally and see significant red room for categories to continue to premiumize. Premium gear is forecast to grow volumes across all geographic clusters and at more than double the rates of the category overall. And the best example of premium execution in our portfolio is Corona. In 2025, Corona celebrated 100 years since its original launch, and 2026 is off to a fast start. with the brands cheering the golden moment at the Milan Cortina Winter Olympics. Since 2018, the volumes of Corona have doubled, and in 2025, volume increased by double digits in 30 markets. The quality, brand power, and consumer preference of Corona has earned them the right for a premium price point. Corona sells on average at a 20% premium to the nearest competitor, and in 2025 was again ranked as the most valuable beer brand in the world. We continue to lead the development of the category and expand occasions to meet consumer trends. Our balanced choice portfolio includes options for consumers seeking low-carb, low-calories, sugar-free, gluten-free, and non-alcohol alternatives. This portfolio is growing ahead of the overall beer category, and momentum continues in 2025. Led by Coronacero globally and Nicola Voltra Zero in the U.S., our non-alcohol beer portfolio delivers a 34% revenue increase, and we estimate to gain its share in 70% of our top 14 non-alcohol beer markets. While non-alcohol beer is currently a relatively small portion of our global beer volume, it is a key opportunity to develop new consumption occasions and increase participation, and we are investing and innovating to lead the growth. In beyond beers, the growth of our portfolio accelerated, increasing revenue by 23% in 2025. Our performance was led by Cutwater in the U.S. which grew revenue in the triple digits and was the number one shark game brand in the total spirits industry in the fourth quarter. After the successful rollout in Africa, our flavored beer flying fish is now expanding to Europe and the Americas. Beyond Beer now accounts for 3% of the total revenue of our business, and the category is projected to grow volumes at double the rate of the overall beer category. The strength of our brands, market capabilities, and innovation pipeline gives us a strong right to win in this segment. Discipline and incremental innovation is a key enabler of our growth. In 2025, our innovations across packaging, brands, and liquids contributed 11% of our total revenue. In the U.S., we led the industry innovation with three of the top five innovations of the year, with Michelob UltraZero and Bush Light Apple, the top two. In China, we launched a one-liter can for Budweiser and a Corona full open lid can to bring the iconic line ritual into the involved channel. In South Korea, we launched the country's first 4-0 beer. With great taste, zero alcohol, zero sugar, zero calories, and zero gluten. And in Beyond Beer, we are expanding our winning propositions globally and innovating with flavor varieties to provide consumers with choice. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In 2025, Biz captured $53 billion in gross merchandising value, a 12% increase versus last year. The growth of Biz Marketplace accelerated and delivered $3.5 billion of GMZ this year, a 61% increase versus last year. The marketplace on Biz has grown rapidly since we initially started developing the platform in 2021. We recognized early that many of our customers could benefit from a one-stop shop for their business. And similarly, that many consumer goods partners could benefit from leveraging the breadth and efficiency of the digital connection we have with our customers. The marketplace has grown to $3.5 billion in GDP. from a standing start five years ago, and we continue to explore the opportunities to scale and enhance profitability. We are still early in the marketplace journey, but we are encouraged by the progress we have made and see a clear opportunity to continue the growth momentum while solving a pain point for our customers and partners. In D2C, our digital platforms continue to enable a one-to-one connection with our consumers and developing new consumption locations. In 2025, we continue to grow our consumer base, now serving 12.3 million consumers, an 11% increase versus 2024. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. Good morning. Good afternoon, everyone. I'll take a few minutes to discuss the progress we have made on four key areas of focus in optimizing our business. Improving margins, compounding dollar EPS and free cash flow growth, making disciplined capital allocation choices, and advancing our sustainability priorities. Our EBITDA margin improved by 101 basis points this year, with margin expansion across four of our five operating regions. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. This year, we delivered underlying profit growth of $350 million. Underlying EPS was $3.73 per share, a 6% increase versus last year's in dollars, and a 9.4% increase in constant currency. Dollar-based EPS has now grown at a CAGR of 6.7% since 2021. EBITDA growth accounted for a $0.46 per share increase this year. Lower net interest expense from active debt management and continued deleveraging contributed $0.09 per share, but was partially offset by a higher cost of hedging and FX movements. Next, let's take a look at free cash flow. In 2024, we made a step change in our free cash flow to $11.3 billion. And in 2025, we maintained this level through a combination of EBITDA growth and margin expansion, reducing our net interest expense through the leverage, and maintaining our disciplined resource allocation. Looking ahead, We are encouraged about the opportunity to grow from this base. With this solid cash generation, we continue to strengthen our balance sheet. We repurchased $2.7 billion of debt. And despite a $2.8 billion FX headwind on our net debt from a stronger euro, we reached a leverage ratio of 2.87 times. In 2025, we improved our debt maturity profile while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 13 years, and no financial covenants. As we continue to deliver, we have increased flexibility in our capital location choices. We have raised our dividend every year since 2021, including the payment of an interim dividend in 2025. We have completed $3.2 billion of share buybacks and are currently executing a further $6 billion program. For 2025, The board has proposed a final dividend of 1 euro per share. Combined with the interim dividend announced in October, this represents a total dividend increase of 15% year-over-year, with the ambition to continue a progressive dividend over time. Now turning to sustainability. Our 2025 goals were set in 2018 to drive impact and efficiency across our value chain. As our business is closely tied to the natural environment and the local communities, we focus on areas that are relevant to us, water, agriculture, climate, and packaging. We achieved our water and agriculture goals and made strong progress against our climate and packaging objectives over the past eight years. We are proud of the progress made, and we continue building on our strong foundation in these areas. As we look ahead to 2026, we expect EBITDA to grow between 4 and 8% on an organic basis, in line with our medium-term outlook. As we continue to invest to execute our strategy while optimizing our resource allocation, we expect net capex to be between 3.5 And we expect our normalized effective tax rate to be between 26 and 28%. With that, I would like to hand it back to Michel for some final comments.