Anheuser-busch Inbev Sa/nv · EURONEXT:ABI
Anheuser-busch Inbev Sa/nv — Q3 2019 Earnings Presentation
27 slides from Anheuser-busch Inbev Sa/nv's earnings presentation, Oct 25, 2019
Slide 1: Third Quarter 2019 Results
Third Quarter 2019 Results 25 October 2019 © AB InBev 2019 – 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: Agenda
AGENDA ➢ 3Q19 Highlights ➢ SAB Combination: 3 Year Anniversary ➢ Risk Management Framework ➢ Financials ➢ Q&A © AB InBev 2019 – All rights reserved 3
Slide 4: 3Q19 Highlights & Headwinds
3Q19 HIGHLIGHTS & HEADWINDS HIGHLIGHTS HEADWINDS • Strong volume growth from several of our major • Shipment phasing driving volume declines in markets including Mexico, South Africa and Colombia China • Advances in our smart affordability strategy in • Higher cost of sales resulting from significan
Slide 5: 3Q19 Financial Summary
3Q19 FINANCIAL SUMMARY Total Revenue +2.7% • Revenue per hl +3.0% • Global Brands +4.1%, +5.2% outside of their home markets Total Volumes -0.5% • Own beer -0.9%, non-beer +4.0% EBITDA 0.0% and EBITDA margin contracted by 107 bps to 40.2% Normalized EPS increased by $0.45 to $1.22 in 3Q19 Underlying
Slide 6: Major Market Highlights
MAJOR MARKET HIGHLIGHTS US: Revenue growth despite volume declines; industry positively impacted by hard seltzer segment growth Mexico: Continued strong top and bottom line growth enhanced by ongoing premiumization Colombia: Best quarterly volume growth since SAB combination closed, with global bran
Slide 7: Rapidly Evolving Our Hard Seltzer Strategy in the US
WE ARE RAPIDLY EVOLVING OUR HARD SELTZER STRATEGY IN THE US, AND WE ARE EXCITED ABOUT THE SEGMENT’S POTENTIAL FOR THE MALT BEVERAGE CATEGORY WITH AN AMAZING PORTFOLIO OF EXISTING BRANDS… …AND THE UPCOMING LAUNCH OF BUD LIGHT SELTZER © AB InBev 2019 – All rights reserved 7
Slide 8: Global Brand Portfolio
Global Brand Portfolio 3Q19 Revenue +4.1% +5.2% outside of home markets -0.1% -0.1% +21.1% 3Q19 Revenue Growth 3Q19 Revenue Growth 3Q19 Revenue Growth outside of the US outside of Belgium outside of Mexico Challenging quarter in China; Shipment phasing impact in the US Corona grew by double-digits o
Slide 9: Expanding Local Production of Corona
We are expanding the local production of Corona to select markets, which allows us to better serve our consumers and customers while reducing our carbon footprint © AB InBev 2019 – All rights reserved 9
Slide 10: Advancing Our Smart Affordability Strategy
WE ARE ADVANCING OUR SMART AFFORDABILITY STRATEGY IN LINE WITH THE CATEGORY EXPANSION FRAMEWORK NEW AFFORDABLE BRANDS BREWED PACKAGING INNOVATIONS AT AFFORDABLE WITH LOCAL INGREDIENTS PRICE POINTS © AB InBev 2019 – All rights reserved 10
Slide 11: Progress on Our Better World Agenda
WE CONTINUE TO MAKE PROGRESS ON OUR BETTER WORLD AGENDA Reinforced our commitment to the UN Sustainable We launched the 2nd round of our 100+ Development Goals, leveraging the power and Accelerator, partnering with entrepreneurs to reach of our global brands solve environmental challenges © AB InBev
Slide 12: Completed Minority Listing of APAC Business on Hong Kong Stock Exchange
WE SUCCESSFULLY COMPLETED THE MINORITY LISTING OF OUR APAC BUSINESS ON THE HONG KONG STOCK EXCHANGE • Budweiser APAC represents a local champion in the consumer goods space • It is one of the fastest growing and most profitable brewers in the region • The listing also provides an attractive platform
Slide 13: SAB Combination: 3 Year Anniversary
SAB COMBINATION: 3 YEAR ANNIVERSARY © AB InBev 2019 – All rights reserved 13
Slide 14: Completed the Capture of Our Cost Synergies This Quarter
WE HAVE COMPLETED THE CAPTURE OF OUR COST SYNERGIES THIS QUARTER 3,200 49 113 100 805 1,304 547 282 Realized by 2Q16-4Q16 FY17 FY18 1Q19 2Q19 3Q19 Synergies SAB by March Captured 31, 2016 to Date © AB InBev 2019 – All rights reserved 14
Slide 15: Combination with SAB Made Us Smarter, More Diversified, More Strategic
OUR TRANSFORMATIONAL COMBINATION WITH SAB HAS MADE US A SMARTER, MORE DIVERSIFIED, AND MORE STRATEGIC COMPANY THAN EVER BEFORE 22 20 17 26% 13 13 11 7 5 2018 GLOBAL BEER SHARE* 2018 EBITDA ($B) 3. Close gap 5 10 70% 2. Growth 4. Toolkits champions Plan 1. Bench- marking 2015 2018 # OF MARKETS = 80%
Slide 16: Risk Management Framework
RISK MANAGEMENT FRAMEWORK © AB InBev 2019 – All rights reserved 16
Slide 17: Significantly Diversified Our Currency Mix
WITH OUR GLOBAL SCALE AND EXPANDED FOOTPRINT, WE HAVE SIGNIFICANTLY DIVERSIFIED OUR CURRENCY MIX NORMALIZED EBITDA BY CURRENCY 2015 2018 OTHER OTHER KRW 7% 10% CAD 3% PEN 4% USD USD 5% ARS 28% 6% 32% COP 6% CNY 6% ZAR 5% EUR 3% KRW 3% 3% CAD 13% 3% ARS 16% MXN 7% BRL 26% CNY 4% 9% BRL EUR MXN © AB I
Slide 18: Practical Constraints on Matching Debt Currencies to EBITDA
IN A PERFECT WORLD, WE WOULD MATCH OUR DEBT CURRENCIES EXACTLY WITH OUR EBITDA, BUT PRACTICAL CONSTRAINTS RULE OUT FUNDING IN EMERGING MARKETS PRACTICAL CONSTRAINTS On an unconstrained basis, optimal portfolios consist of Market Relative Tenor high proportions of debt in EM Capacity Cost currencies
Slide 19: Proxy Currencies With Long-Term Correlations to EBITDA Currencies
GIVEN THESE CONSTRAINTS, WE INSTEAD RELY ON PROXY CURRENCIES WITH DEMONSTRATED LONG-TERM CORRELATIONS TO OUR PRIMARY EBITDA CURRENCIES Gross Debt by Normalized EBITDA Estimated Market Tenors Rate Differential Market currency (after by currency (%) Capacity (USD) Available vs. USD hedging) (%) United
Slide 20: Debt Profile Protects Against Interest Rate and Currency Risk
OUR DEBT PROFILE CONTINUES TO PROTECT US AGAINST INTEREST RATE AND CURRENCY RISK, WITH LONG WEIGHTED AVERAGE MATURITY ~91% OF OUR DIVERSE CURRENCY ADDRESSED NEAR VERY MANAGEABLE GROSS DEBT MIX OF OUR DEBT TERM MATURITIES TO PRE-TAX GROSS DEBT IS FIXED RATE REDUCES RISK REDUCE REFINANCING COUPON PRES
Slide 21: Reduced Gross Debt and Extended Maturities Since SAB Combination
SINCE CLOSING THE SAB COMBINATION, WE HAVE REDUCED GROSS DEBT AND EXTENDED MATURITIES SIGNIFICANTLY TO ELIMINATE ANY REFINANCING RISKS IN THE NEAR TO MEDIUM TERM BOND MATURITY PROFILE END OF 2016 BOND MATURITY PROFILE PRO FORMA 3Q19 Pro forma to reflect the proceeds of IPO Weighted Average Tenor: 10
Slide 22: Financials
Financials © AB InBev 2019 – All rights reserved 22
Slide 23: Decrease in Net Finance Costs Excluding Non-Recurring Items
DECREASE IN NET FINANCE COSTS EXCLUDING NON- RECURRING ITEMS DRIVEN PRIMARILY BY THE SWING IN MTM ON THE SHARE-BASED PAYMENT PROGRAMS Interest expense Net interest on MTM - share Currency and Bank fees, Hyperinflation 3Q18 including net defined Accretion based payment other hedging transaction monet
Slide 24: Normalized Effective Tax Rate (ETR)
NORMALIZED EFFECTIVE TAX RATE (ETR) 26.8% 27.2% 27% 24.9% 25.5% 25% 22.6% 22.9% 22.8% 19.8% 3Q18 3Q18 Restated 3Q19 3Q19 9M18 9M18 Restated 9M19 9M19 FY19 Restated ex MTM ex MTM Restated ex MTM ex MTM Guidance* *Reflects our normalized ETR guidance, excluding any gains and losses relating to the hed
Slide 25: Underlying EPS Decreased From $1.11 to $0.94 in 3Q19
UNDERLYING EPS DECREASED FROM $1.11 TO $0.94 IN 3Q19 1.11 0.12 0.02 0.07 0.09 0.02 0.03 0.94 USD 3Q18 Restated Normalized Hyperinflation Net Finance Income Tax Associates and Net Hyperinflation 3Q19 EBIT impact at Costs Expense Non-Controlling Impact in EPS EBIT level Interest Notes: (1) Underlying
Slide 26: 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 27: Q&A
Q&A © AB InBev 2019 – All rights reserved 27