Anheuser-busch Inbev Sa/nv · EURONEXT:ABI
Anheuser-busch Inbev Sa/nv — Q3 2018 Earnings Presentation
34 slides from Anheuser-busch Inbev Sa/nv's earnings presentation, Oct 25, 2018
Slide 1: Third Quarter 2018 Results
Third Quarter 2018 Results 25 October 2018 © AB InBev 2018 – All rights reserved
Slide 2: Legal Disclaimers
Legal Disclaimers Certain statements contained in this report that are not statements of historical fact constitute forward-looking statements, notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the future filings of the Company
Slide 3: 3Q18 Results & Highlights, US Strategy Update, Financials, Q&A
3Q18 Results & Highlights US Strategy Update Financials Q&A © AB InBev 2018 – All rights reserved 3
Slide 4: Highlights of the quarter
Highlights of the quarter • Revenue growth despite headwinds across emerging markets • Global brand portfolio revenues grew double-digits outside of their home markets • Affordability platform expansion with introduction of cassava-based “Nossa” in Brazil • Launched 100+ Accelerator to help achieve
Slide 5: 3Q18 Financial Summary
3Q18 Financial Summary Total Revenue +4.5% • Revenue per hl +4.2%, +4.4% on a constant geographic basis • Global Brands +7.7%, +10.6% outside of their home markets Total Volumes +0.2% • Own beer +0.5%, non-beer -2.4% EBITDA +7.5% and EBITDA margin expanded by 116 bps to 40.3% Normalized EPS decrease
Slide 6: Major country highlights
Major country highlights US: Top-line growth in 3Q18 with continued progress of our commercial strategy Mexico: Increased differentiation of our classic lager and easy drinking portfolio Colombia: Aguila volumes up >50% fueled by 2018 FIFA World Cup RussiaTM Brazil: Continued premiumization and new
Slide 7: Global Brand revenues +7.7% in 3Q18 and +10.6% outside of their home markets
Global Brand revenues +7.7% in 3Q18 and +10.6% outside of their home markets Budweiser Corona +6.4% +10.6% • Sustained momentum post 2018 FIFA • The Corona Sunsets franchise continues to World Cup RussiaTM, growing top-line 9.3% expand, with 11 000 events expected to be outside of the US activated i
Slide 8: Launch of 100+ Accelerator to support achievement of 2025 Sustainability Goals
Launch of 100+ Accelerator to support achievement of 2025 Sustainability Goals • 10 challenges aligned to our 2025 Sustainability Goals • 600+ submissions from around the world • 21 start-ups selected to join the program • Start-ups will pitch ideas to AB InBev leaders and an external audience in 20
Slide 9: US Strategy Update
US STRATEGY UPDATE ©© © ABAB InBev InBev AB 2018 InBev 2018 –– – All 2018 All rights rights All reserved rights reserved9 9 reserved
Slide 10: Looking back over the last ten years…
Looking back over the last ten years… TOP-LINE We have historically delivered strong EBITDA and Cash EBITDA Flow performances, while Top-line has been below our EBITDA MARGIN initial expectations CASH FLOW © AB InBev 2018 – All rights reserved 10
Slide 11: Volumes under pressure from a softer industry and segment mix shift within beer
249_84 Volumes under pressure from a softer industry and segment mix shift within beer LY Share Performance Mix Shift CY Share Major consumer Beer is losing trends, such as Our positive segment premiumization, and share performance is share of demographic shifts are more than offset by throat to win
Slide 12: To identify opportunities for growth in the US, we leveraged the category expansion framework
To identify opportunities for growth in the US, we leveraged the category expansion framework PREMIUMIZATION OTHER BEYOND EASY BEER BEER DRINKING CLASSIC STYLES AFFORDABILITY © AB InBev 2018 – All rights reserved 12
Slide 13: Focused strategy built upon five commercial pillars
This led to the development of a focused strategy built upon five commercial pillars © AB InBev 2018 – All rights reserved 13
Slide 14: We have executed successful commercial initiatives on our Mainstream brands
We have executed successful …resulting in Budweiser and commercial initiatives on our Bud Light growing penetration Mainstream brands… in 2018 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 © AB InBev 2018 – All rights reserved 14
Slide 15: Michelob Ultra continues to grow rapidly with significant opportunity across the US
Michelob Ultra continues to grow rapidly (>20% CAGR) with a significant opportunity for additional growth across the US Share in largest beer states in US Michelob Ultra Share ~9% TX FL NC US Average OH High PA NY IL CA Low Michelob Ultra Share ~2% Size of bubble represents industry beer volume © AB
Slide 16: Our Above Premium innovations are among the top share gainers
#6 #10 Our Above Premium innovations are among the top 15 share #14 Budweiser Reserve Series gainers this year, driving incremental growth to our portfolio and our category 16 © AB InBev 2018 – All rights reserved
Slide 17: US Strategy Update
US STRATEGY UPDATE ©© © ABAB InBev InBev AB 2018 InBev 2018 –– – All 2018 All rights rights All reserved rights reserved17 17 reserved
Slide 18: Financials
Financials ©©AB ABInBev 2018– –AllAllrights InBev2018 rightsreserved reserved 18 18 18
Slide 19: Synergy capture continues
Synergy capture continues • Continue to expect estimated incremental pre-tax synergies of 3.2 billion USD per annum (on a constant currency basis as of August 2016), including the 1.05 billion USD cost and efficiency savings identified by SAB, to be delivered by October 2020, and does not include an
Slide 20: Increase in Net Finance Costs driven by swing in MTM on share-based payment programs
Increase in Net Finance Costs driven entirely by the swing in MTM on the share-based payment programs Net interest on MTM - share Bank fees, Interest expense net defined based Currency and transaction Hyperinflation including benefit Accretion payment other hedging taxes and monetary 3Q17 borrowing
Slide 21: Normalized Effective Tax Rate (ETR)
Normalized Effective Tax Rate (ETR) 26.0% 25.3% 26% 23.5% 24% 20.3% 19.1% 19.4% 17.9% 16.7% 3Q17 3Q17 3Q18 3Q18 9M17 9M17 9M18 9M18 FY18 Guidance excluding MTM excluding MTM excluding MTM excluding MTM © AB InBev 2018 – All rights reserved 21
Slide 22: Underlying EPS of $1.16 versus $1.19 in 3Q17
Underlying EPS of $1.16 versus $1.19 in 3Q17 1.19 1.16 0.08 0.03 0.02 0.06 0.13 0.10 USD 3Q17 Normalized Hyperinflation Net Finance Income Tax Associates and Net Hyperinflation 3Q18 EBIT impact at EBIT level Costs Expense Non-Controlling Impact in EPS Notes: Interest (1) Underlying EPS refers to Nor
Slide 23: Capital Allocation Objectives
Capital Allocation Objectives Our optimal capital structure is a Net Debt/EBITDA ratio of approximately 2x. The priorities for the use of cash are as follows: 1. Organic growth: Investing in the organic growth of our business 2. Deleveraging: Deleveraging to around the 2x level remains our commitmen
Slide 24: Capital Structure Decisions
Capital Structure Decisions • Consistent with our capital allocation priorities and in light of recent currency volatility, we are rebasing our dividend payout to accelerate deleveraging while continuing to prioritize investment in organic growth opportunities and creating greater financial flexibil
Slide 25: Q&A
Q&A © AB InBev 2018 – All rights reserved 25
Slide 26: Appendix
Appendix © AB InBev 2018 – All rights reserved 26
Slide 27: North America – 3Q18 Summary
North America – 3Q18 Summary • Revenue +1.4% • Revenue per hl +1.8% as a result of premiumization and revenue management initiatives • Volumes -0.5% • EBITDA -2.2% with margin contraction of 147 bps to 40.1% © AB InBev 2018 – All rights reserved 27
Slide 28: US – 3Q18 Summary
US – 3Q18 Summary • Industry STRs -0.5% • AB InBev STRs -1.5% • Market share decline of 50 bps • AB InBev volumes (STWs) -0.5% • Revenue +1.5% • Revenue per hl growth of +2.0% • EBITDA -1.9% with margin contraction of 142 bps to 40.5% © AB InBev 2018 – All rights reserved 28
Slide 29: Latin America West – 3Q18 Summary
Latin America West – 3Q18 Summary • Revenue +6.3% • Revenue per hl +4.6% as a result of premiumization • Volumes +1.6% • EBITDA +17.6% with margin expansion of 502 bps to 52.7% © AB InBev 2018 – All rights reserved 29
Slide 30: Latin America North – 3Q18 Summary
Latin America North – 3Q18 Summary • Revenue +3.7% • Revenue per hl +6.3% as a result of annual price increase and premiumization • Volumes -2.5% • EBITDA +11.6% with margin expansion of 304 bps to 42.9% © AB InBev 2018 – All rights reserved 30
Slide 31: Brazil – 3Q18 Summary
Brazil – 3Q18 Summary • Revenue +2.1% • Industry beer volumes declined due to challenging macro environment • Volumes -3.3% • Beer volumes -3.1% • Non-beer volumes -3.9% • EBITDA +13.8% with margin expansion of 446 bps to 43.6% © AB InBev 2018 – All rights reserved 31
Slide 32: Latin America South – 3Q18 Summary
Latin America South – 3Q18 Summary • Revenue +13.8% • Revenue per hl +19.9% due to price increases in line with inflation and premiumization • Volumes -5.1% • EBITDA +14.4% with margin expansion of 25 bps to 41.1% © AB InBev 2018 – All rights reserved 32
Slide 33: Europe, Middle East & Africa – 3Q18 Summary
Europe, Middle East & Africa – 3Q18 Summary • Revenue +4.8% • Revenue per hl +0.6%, due to brand mix driven by premiumization • Volumes +4.1% • Own beer volumes +4.7% • EBITDA -0.9% with margin contraction of 216 bps to 37.5% © AB InBev 2018 – All rights reserved 33
Slide 34: Asia Pacific – 3Q18 Summary
Asia Pacific – 3Q18 Summary • Revenue +5.2% • Revenue per hl +4.3%, due to premiumization, enhanced by continued growth of the High End Company • Volumes +0.8% • EBITDA +14.6% with margin expansion of 304 bps to 36.8% © AB InBev 2018 – All rights reserved 34