AB InBev Reports First Quarter 2023 Results

Consistent execution of our strategy drives double-digit top and bottom-line growth

BRUSSELSBRUSSELS–(BUSINESS WIRE)–AB InBev (Brussel:ABI) (BMV:ANB) (JSE:ANH) (NYSE:BUD):

Regulated and inside information¹

“Our business momentum continued this quarter, delivering a 13.2% increase in revenue through a combination of both volume and revenue per hl growth, and an EBITDA increase of 13.6%. We continue to invest for the long-term and these results reinforce our confidence in the resilience of the beer category, the effectiveness of our strategy and the strength of our platform to deliver consistent profitable growth.” – Michel Doukeris, CEO, AB InBev

Total Revenue + 13.2% Revenue increased by 13.2% with revenue per hl growth of 12.4%. 15.4% increase in combined revenues of our global brands, Budweiser, Stella Artois and Corona, outside of their respective home markets. Approximately 62% of our revenue through B2B digital platforms with the monthly active user base of BEES reaching 3.1 million users. Over 100 million USD of revenue generated by our digital direct-to-consumer ecosystem. Total Volume +0.9% Total volumes grew by 0.9%, with own beer volumes up by 0.4% and non-beer volumes up by 3.6%.

Normalized EBITDA + 13.6% Normalized EBITDA increased by  13.6% to 4 759 million USD with a normalized EBITDA margin expansion of 13 bps to 33.5%. Underlying Profit 1 310 million USD Underlying profit (normalized profit attributable to equity holders of AB InBev excluding the impact of hyperinflation) was 1 310 million USD in 1Q23 compared to 1 204 million USD in 1Q22. Underlying EPS 0.65 USD Underlying EPS was 0.65 USD in 1Q23, an increase from 0.60 USD in 1Q22.

1The enclosed information constitutes inside information as defined in Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse, and regulated information as defined in the Belgian Royal Decree of 14 November 2007 regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market. For important disclaimers and notes on the basis of preparation, please refer to page 13.

Management comments

Consistent execution of our strategy drives double-digit top and bottom-line growth

We delivered top-line growth of 13.2%, comprised of a mix of 0.9% volume and 12.4% revenue per hl growth, driven by pricing actions, ongoing premiumization and other revenue management initiatives. EBITDA increased by 13.6% with margin expansion of 13bps, despite anticipated commodity cost headwinds and while increasing sales and marketing investments in our brands. Underlying USD earnings per share increased by 8.7%.

Progressing our strategic priorities

We continue to execute on and invest in three key strategic pillars to deliver consistent growth and long-term value creation.

Lead and grow the category:

This quarter we delivered a broad-based total volume increase of 0.9% with volume growth and revenue growth in more than 60% and 80% of our markets, respectively.

Digitize and monetize our ecosystem:

BEES captured approximately $8.2 billion USD of gross merchandise value (GMV), a 32% increase versus 1Q22 with 62% of our revenue through B2B digital channels. BEES Marketplace is live in 15 markets and generated an annualized GMV of approximately 1.2 billion USD with 59% of BEES customers now also Marketplace buyers.

Optimize our business:

EBITDA grew by 13.6% with margin expansion of 13bps, supported by disciplined resource allocation and overhead management.

Lead and grow the category

We are executing on five proven and scalable levers to drive category expansion:

• Inclusive Category: Through our focus on brand, pack and liquid innovations, we continued to increase the average percentage of consumers purchasing our portfolio of brands, according to our estimates. This increase in participation was led by consumers in our emerging markets.

• Core Superiority: Our mainstream portfolio delivered low-teens revenue growth and gained market share in 75% of our key markets, according to our estimates.

• Occasions Development: Our global no-alcohol beer portfolio delivered over 30% revenue growth, with our performance driven by Budweiser Zero in Brazil and the US, where the brand was the #1 no-alcohol beer by volume in 1Q23, and growth of Corona Cero across Canada and Europe. In addition, our digital direct-to-consumer products are enabling a deeper understanding of our consumers, resulting in the development of new consumption occasions such as Brahma Soccer Wednesday’s and Corona Sunsets.

• Premiumization: Our above core beer portfolio grew revenue by mid-teens, led by continued double-digit growth of Michelob ULTRA in the US and Mexico and double-digit growth of Original and Spaten in Brazil. Our global brands grew revenue by 15.4% outside of their home markets, led by Budweiser with 17.8% growth, supported by the return of consumer demand in China and continued growth in India. Stella Artois grew by 13.3% and Corona by 11.9%.

• Beyond Beer: Our global Beyond Beer business contributed over 325 million USD of revenue and grew by low-single digits as growth globally was partially offset by a soft malt-based seltzer industry in the US. In Brazil, Beats successfully activated demand during the return of Carnival and delivered over 75% revenue growth. In the US, within the spirits-based ready-to-drink segment, Cutwater and NÜTRL vodka seltzer combined grew revenues by over 50%.

Digitize and monetize our ecosystem

• Digitizing our relationships with more than 6 million customers globally: As of 31 March 2023, BEES is live in 20 markets with approximately 62% of our 1Q23 revenues captured through B2B digital platforms. In 1Q23, BEES had 3.1 million monthly active users and captured approximately 8.2 billion USD in gross merchandise value (GMV), growth of 16% and 32% versus 1Q22 respectively. BEES Marketplace is live in 15 markets with 59% of BEES customers also marketplace buyers. Marketplace captured approximately 295 million USD in GMV from sales of third-party products, growth of 34% versus 1Q22.

• Leading the way in DTC solutions: Our omnichannel direct-to-consumer (DTC) ecosystem of digital and physical products generated revenue of more than 330 million USD, high-single digit growth versus 1Q22. Our digital DTC products, Zé Delivery, TaDa and PerfectDraft are now available in 20 markets, and generated over 100 million USD in revenue, representing low-teens growth versus 1Q22.

Optimize our business

EBITDA grew by 13.6% with margin expansion of 13bps, supported by disciplined resource allocation and overhead management. Our bond portfolio maintains a very manageable weighted average pre-tax coupon rate of approximately 4% with 95% of the portfolio fixed rate. In recognition of our deleveraging progress and strong free cash flow generation our credit rating was recently upgraded from Baa1 to A3 by Moody’s and from BBB+ to A- by S&P.

Advancing our sustainability priorities

We continue to deliver on our sustainability agenda to enable our commercial vision and fulfill our company purpose. Collaboration is key to achieving a more sustainable future and, this quarter, we were named a top 2022 Supplier Engagement Leader by CDP in recognition of the action we are taking to drive decarbonization across our supply chain.

Creating a future with more cheers

Through the consistent implementation of our category expansion levers, we continue to lead and grow the beer category, delivering broad-based volume and revenue growth across our markets. Digitizing and monetizing our ecosystem is bringing us closer than ever to our customers and consumers and we continue to optimize our business with a relentless focus on disciplined resource allocation and everyday efficiency.

We are investing for the long-term and continue to build on our platform to deliver consistent profitable growth. Our industry leading portfolio of brands across all price points, advantaged geographic footprint and accelerated digital transformation position us well to generate value for our stakeholders and deliver on our purpose to create a future with more cheers.

2023 Outlook

(i) Overall Performance: We expect our EBITDA to grow in line with our medium-term outlook of between 4-8% and our revenue to grow ahead of EBITDA from a healthy combination of volume and price. The outlook for FY23 reflects our current assessment of inflation and other macroeconomic conditions.

(ii) Net Finance Costs: Net pension interest expenses and accretion expenses are expected to be in the range of 200 to 230 million USD per quarter, depending on currency and interest rate fluctuations. We expect the average gross debt coupon in FY23 to be approximately 4%.

(iii) Effective Tax Rates (ETR): We expect the normalized ETR in FY23 to be in the range of 27% to 29%. The ETR outlook does not consider the impact of potential future changes in legislation.

(iv) Net Capital Expenditure: We expect net capital expenditure of between 4.5 and 5.0 billion USD in FY23.

Figure 1. Consolidated performance (million USD)
	1Q22	1Q23	Organic
			growth
Total Volumes (thousand hls)	139 344	140 548	0.9%
AB InBev own beer	120 585	121 060	0.4%
Non-beer volumes	17 945	18 587	3.6%
Third party products	815	901	12.0%
Revenue	13 235	14 213	13.2%
Gross profit	7 246	7 696	12.4%
Gross margin	54.8%	54.1%	-35 bps
Normalized EBITDA	4 486	4 759	13.6%
Normalized EBITDA margin	33.9%	33.5%	13 bps
Normalized EBIT	3 294	3 503	14.9%
Normalized EBIT margin	24.9%	24.6%	39 bps
Profit attributable to equity holders of AB InBev	95	1 639
Underlying profit attributable to equity holders of AB InBev	1 204	1 310
Earnings per share (USD)	0.05	0.81
Underlying earnings per share (USD)	0.60	0.65

Figure 2. Volumes (thousand hls)
	1Q22	Scope	Organic	1Q23	Organic growth
			growth		Total Volume	Own beer volume
North America	24 087	16	-250	23 853	-1.0%	-1.1%
Middle Americas	34 249	–	23	34 271	0.1%	-0.5%
South America	40 394	-7	– 101	40 286	-0.2%	-1.8%
EMEA	20 124	43	-210	19 958	-1.0%	-1.5%
Asia Pacific	20 288	–	1 826	22 114	9.0%	8.8%
Global Export and Holding Companies	202	-52	-84	66	-55.7%	-56.5%
AB InBev Worldwide	139 344	–	1 204	140 548	0.9%	0.4%

Key Market Performances

United States: Continued top-line growth with stable EBITDA despite the elevated cost environment

• Operating performance: Revenue grew by 4.0% with revenue per hl increasing by 5.6%, driven by revenue management initiatives and continued premiumization. Sales-to-wholesalers (STWs) were down by 1.6% and sales-to-retailers (STRs) declined by 3.0%, estimated to be below the industry. EBITDA was flat.

• Commercial highlights: The beer industry performance improved in 1Q23, demonstrating resilience even in the context of an ongoing inflationary environment. We continue to execute our commercial strategy, with our above core beer and Beyond Beer brands collectively increasing their share of our revenue. Our above core beer portfolio continued to gain share of the segment, growing volumes by low-single digits. In Beyond Beer, our spirits-based ready-to-drink portfolio grew volume by strong double-digits.

Mexico: Double-digit top- and bottom-line growth

• Operating performance: Revenue grew by mid-teens, with low-teens revenue per hl growth driven by pricing actions and other revenue management initiatives. Our volumes grew by low-single digits, outperforming the industry, supported by the phasing impact of an earlier Easter. EBITDA grew by low-teens.

• Commercial highlights: We delivered broad-based volume growth across price segments, driven by ongoing portfolio development and digital transformation. Our above core brands once again led our growth, increasing volumes by low-teens, driven by Michelob ULTRA and Modelo. We continued to progress our digital and physical DTC initiatives with our digital DTC platform, TaDa, now operating in over 50 cities and fulfilling on average over 300 000 orders per month, and further expansion of our Modelorama footprint to over 10 000 stores.

Colombia: Continued top-line growth and share of alcohol gains despite inflationary pressures impacting consumer demand

• Operating performance: Revenue increased by mid-single digits with high-single digit revenue per hl growth, driven by pricing actions and other revenue management initiatives. Volumes declined by low-single digits, as overall consumer demand was impacted by inflationary pressures. EBITDA declined by low-single digits due primarily to anticipated commodity cost headwinds and elevated distribution costs.

• Commercial highlights: We continue to invest behind our category expansion levers to lead and grow the category, with our beer portfolio continuing to gain share of total alcohol. Our leading mainstream portfolio drove our performance, delivering mid-single digit revenue growth with a particularly strong performance from Poker which grew volumes by high-single digits.

Brazil: Double-digit top- and bottom-line growth with margin expansion

• Operating performance: Revenue grew by 15.7% with revenue per hl growth of 12.9%, driven by revenue management initiatives and continued premiumization. Volumes grew by 2.5%, with beer volumes increasing by 0.9%, representing stable market share, and non-beer volumes by 7.3%. EBITDA increased by 26.5% with margin expansion of 235bps.

• Commercial highlights: Our premium and super premium portfolios continued to outperform, delivering volume growth in the mid-thirties, led by Original and Spaten. Non-beer volume growth was led by the performance of Guaraná Antarctica Zero and Pepsi Black and supported by the expansion of portfolio availability through BEES. BEES Marketplace continued to expand partnerships and product availability, reaching over 700 thousand customers, a 70% increase versus 1Q22. Our digital DTC platform, Zé Delivery, has now reached 5 million monthly active users, a 9% increase versus 1Q22.

Europe: Double-digit top-line and high-single digit bottom-line growth

• Operating performance: Revenue grew by low-teens, with flattish volume and low-teens revenue per hl growth driven by pricing actions, ongoing demand for our premium brands and on-premise recovery. EBITDA grew by high-single digits.

• Commercial highlights: We continued to premiumize our portfolio in Europe. Our global brands and super premium portfolio delivered low-teens revenue growth, led by Budweiser and Corona.

South Africa: High-single digit top-line growth with record high quarterly volumes

• Operating performance: Revenue grew by high-single digits with high-single digit revenue per hl growth and low-single digit volume growth, ahead of the industry according to our estimates. EBITDA declined by low-single digits due primarily to anticipated commodity cost headwinds.

• Commercial highlights: The momentum of our business continued, delivering record high volumes for the first quarter. Our performance was led by Carling Black Label, the #1 beer brand in the country, which delivered over 20% revenue growth. Our premium, super premium and beyond beer portfolios all delivered double-digit increases in revenue.

China: Double-digit top- and bottom-line growth as consumer demand accelerates

• Operating performance: Volumes grew by 7.4%, outperforming the industry according to our estimates, as the operating environment in our key regions and sales channels improved throughout the quarter. Revenue per hl increased by 3.3%, driven by premiumization and revenue management initiatives, resulting in revenue growth of 11.0%. EBITDA grew by 13.2%.

• Commercial highlights: We delivered volume growth across all segments of our portfolio driven by continued investment behind our commercial strategy. Our performance was led by our premium and super premium brands which grew volumes by approximately 10%. The roll out and adoption of the BEES platform has accelerated, with BEES now present in over 180 cities and representing approximately 40% of our revenue in March.

Highlights from our other markets

• Canada: Revenue increased by mid-teens with revenue per hl growth of high-single digits, driven by revenue management initiatives and premiumization. Volume increased by mid-single digits, outperforming the industry and supported by a favorable comparable from COVID-19 restrictions implemented in 1Q22.
• Peru: We delivered double-digit top-line growth with revenue per hl growing by low-teens, driven primarily by pricing actions and other revenue management initiatives. Volumes increased by low-single digits.
• Ecuador: Revenue grew by high-single digits with volumes increasing by low-single digits, supported by a favorable comparable from COVID-19 restrictions implemented in January last year. We continue to focus on expanding the beer category and driving premiumization with our above core brands growing revenue by double-digits.
• Argentina: Revenue increased by high-single digits on a reported USD basis and by over 100% on an organic basis, driven by revenue management initiatives in a highly inflationary environment. Volumes declined by high-single digits due primarily to inflationary pressures impacting consumer purchasing power.
• Africa excluding South Africa: In Nigeria, our top-line declined by mid-single digits with beer volumes declining by approximately 20%, in-line with the industry according to our estimates. Industry performance was impacted by a temporary lack of local currency limiting the ability of consumers to purchase goods. In our other markets, we grew revenue in aggregate by high-single digits, driven by Tanzania, Uganda and Ghana.
• South Korea: Volumes grew by double-digits driven by the strong performance of our local champion Cass, continued market share expansion and further improvement in the operating environment. Revenue per hl increased by low-single digits resulting in low-teens revenue growth.

Consolidated Income Statement

Figure 3. Consolidated income statement (million USD)
	1Q22	1Q23	Organic
			growth
Revenue	13 235	14 213	13.2%
Cost of sales	-5 989	-6 517	-14.0%
Gross profit	7 246	7 696	12.4%
SG&A	-4 116	-4 344	-10.3%
Other operating income/(expenses)	164	152	7.4%
Normalized profit from operations (normalized EBIT)	3 294	3 503	14.9%
Non-underlying items above EBIT (incl. impairment losses)	-96	-46
Net finance income/(cost)	-1 192	-1 237
Non-underlying net finance income/(cost)	104	375
Share of results of associates	55	50
Non-underlying share of results of associates	-1 143	–
Income tax expense	-524	-597
Profit	499	2 048
Profit attributable to non-controlling interest	404	409
Profit attributable to equity holders of AB InBev	95	1 639
Normalized EBITDA	4 486	4 759	13.6%
Underlying profit attributable to equity holders of AB InBev	1 204	1 310

We are reporting our Argentinean operation applying hyperinflation accounting under IAS 29, following the categorization of Argentina as a country with a three-year cumulative inflation rate greater than 100%, since 2018. Inflation in Argentina has accelerated over the past 12 months, resulting in a more significant impact on the organic revenue growth of AB InBev than historically. For illustrative purposes, fully excluding the Argentinean operation, 1Q23 organic revenue growth for AB InBev would be 9.1% versus the 13.2% reported.

Consolidated other operating income/(expenses) in 1Q23 increased by 7.4% primarily driven by higher government grants. In 1Q22, Ambev recognized 17 million USD income in other operating income related to tax credits. The impact is presented as a scope change and does not affect the presented organic growth rates.

Non-underlying items above EBIT & Non-underlying share of results of associates

Figure 4. Non-underlying items above EBIT & Non-underlying share of results of associates (million USD)
	1Q22	1Q23
COVID-19 costs	-9	–
Restructuring	-37	-27
Business and asset disposal (incl. impairment losses)	-4	-19
AB InBev Efes related costs	-46	–
Non-underlying items in EBIT	-96	-46
Non-underlying share of results of associates	-1 143	–

EBIT excludes negative non-underlying items of 46 million USD in 1Q23.

Non-underlying share of results of associates in 1Q22 includes the non-cash impairment of 1 143 million USD the company recorded on its investment in AB InBev Efes.

Net finance income/(cost)

Figure 5. Net finance income/(cost) (million USD)
	1Q22	1Q23
Net interest expense	-846	-806
Net interest on net defined benefit liabilities	-18	-21
Accretion expense	-150	-183
Net interest income on Brazilian tax credits	48	31
Other financial results	-225	-257
Net finance income/(cost)	-1 192	-1 237

Non-underlying net finance income/(cost)

Figure 6. Non-underlying net finance income/(cost) (million USD)
	1Q22	1Q23
Mark-to-market	231	375
Gain/(loss) on bond redemption and other	-127	–
Non-underlying net finance income/(cost)	104	375

Non-underlying net finance cost in 1Q23 includes mark-to-market gains on derivative instruments entered into to hedge our shared-based payment program and shares issued in relation to the combination with Grupo Modelo and SAB.

The number of shares covered by the hedging of our share-based payment program, the deferred share instrument and the restricted shares are shown in figure 7, together with the opening and closing share prices.

Figure 7. Non-underlying equity derivative instruments
	1Q22	1Q23
Share price at the start of the period (Euro)	53.17	56.27
Share price at the end of the period (Euro)	54.26	61.33
Number of equity derivative instruments at the end of the period (millions)	100.5	100.5

Income tax expense

Figure 8. Income tax expense (million USD)
	1Q22	1Q23
Income tax expense	524	597
Effective tax rate	24.8%	23.0%
Normalized effective tax rate	25.6%	26.8%

The increase in normalized ETR in 1Q23 compared to 1Q22 is driven by country mix.

Figure 9. Underlying Profit attributable to equity holders of AB InBev (million USD)
	1Q22	1Q23
Profit attributable to equity holders of AB InBev	95	1 639
Net impact of non-underlying items on profit	1 119	-342
Hyperinflation impacts in underlying profit	– 11	13
Underlying profit attributable to equity holders of AB InBev	1 204	1 310

Basic and underlying EPS

Figure 10. Earnings per share (USD)
	1Q22	1Q23
Basic EPS	0.05	0.81
Net impact of non-underlying items on profit	0.56	-0.18
Hyperinflation impacts in EPS	-0.01	0.01
Underlying EPS	0.60	0.65
Weighted average number of ordinary and restricted shares (million)	2 012	2 015

Figure 11. Key components – Underlying EPS in USD
	1Q22	1Q23
Normalized EBIT before hyperinflation	1.65	1.76
Hyperinflation impacts in normalized EBIT	-0.01	-0.02
Normalized EBIT	1.65	1.74
Net finance cost	-0.59	-0.61
Income tax expense	-0.27	-0.30
Associates & non-controlling interest	-0.17	-0.18
Hyperinflation impacts in EPS	-0.01	0.01
Underlying EPS	0.60	0.65
Weighted average number of ordinary and restricted shares (million)	2 012	2 015

Reconciliation between normalized EBITDA and profit attributable to equity holders

Figure 12. Reconciliation of normalized EBITDA to profit attributable to equity holders of AB InBev (million USD)
	1Q22	1Q23
Profit attributable to equity holders of AB InBev	95	1 639
Non-controlling interests	404	409
Profit	499	2 048
Income tax expense	524	597
Share of result of associates	-55	-50
Non-underlying share of results of associates	1 143	–
Net finance (income)/cost	1 192	1 237
Non-underlying net finance (income)/cost	-104	-375
Non-underlying items above EBIT (incl. impairment losses)	96	46
Normalized EBIT	3 294	3 503
Depreciation, amortization and impairment	1 192	1 255
Normalized EBITDA	4 486	4 759

Normalized EBITDA and normalized EBIT are measures utilized by AB InBev to demonstrate the company’s underlying performance.

Contacts

Investors

Shaun Fullalove
Tel: +1 212 573 9287

E-mail: [email protected]

Maria Glukhova
Tel: +32 16 276 888

E-mail: [email protected]

Cyrus Nentin
Tel: +1 646 746 9673

E-mail: [email protected]

Media

Kate Laverge
Tel: +1 917 940 7421

E-mail: [email protected]

Ana Zenatti
Tel: +1 646 249 5440

E-mail: [email protected]

Michaël Cloots
Tel: +32 497 167 183

E-mail: [email protected]

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