Anheuser-Busch InBev SA/NV Q2 FY2025 earnings call

• Key Highlights: Consistent strategy execution led to EBITDA up 6.5%, revenue per hectoliter up 4.9%, non-alcohol beer up 33%, BEES GMV up 63%, EPS up 8.7% in U.S. dollars and 17.4% in constant currency, free cash flow up $0.5 billion.
• Regional Operations: North America portfolio momentum, Middle Americas varied performance with Mexico outperforming industry, Brazil impacted by soft industry and weather, South Africa gaining share. Europe saw premiumization drive growth. APAC China faced volume underperformance but focused on off-trade opportunities.
• Strategic Pillars:
  • Leading and growing the category: Invested $3.6B in sales and marketing over first half, megabrands led growth with net revenue up 5.6%, non-alcohol beer net revenue up 33% with Corona Cero leading.
  • Digitize and monetize ecosystem: BEES marketplace GMV $12.2B, DTC digital platforms generated $134M revenue up 6%.
  • Optimize business: EBITDA margins improved 116 basis points, net debt-to-EBITDA ratio 3.27x, deleveraging progress made.

North America: In the U.S., portfolio momentum continued with Michelob ULTRA and Busch Light as the #1 and #2 volume share gainers in the industry. Spirits-based RTDs grew volumes in low teens. Middle Americas: Mexico volumes grew low single digits, Colombia had record high volumes driving high single-digit top and bottom-line growth, Brazil revenue declined but EBITDA increased by 5.3% with margin expansion, South Africa gained share in Beer and Beyond Beer with revenue and EBITDA growing mid-single digits. Europe: Improved industry, premiumization drove top and bottom line growth, volumes flat but outperformed industry in five of six key markets. APAC: China revenue declined, but efforts to strengthen execution in the in-home channel and key innovations like Harbin Zero Sugar. Non-alcohol beer: Net revenue grew 33%, led by Corona Cero. BEES marketplace: GMV increased 63% to $785 million. Revenue contribution details: Not explicitly given absolute revenue figures but key segments mentioned.

• Management reaffirmed 2025 outlook of 4%-8% EBITDA growth.
• Confident in delivering on outlook based on first half performance, strategic choices, and diversified geographic footprint.

• Soft industries in China and Brazil impacted volumes.
• Consumer constraint and inflation affecting purchase power and quantity of consumption.
• Weather and economic uncertainties in various markets impacting industry performance.

Q: Given the volume decline in the first half and some headwinds, how comfortable are you with not achieving volume growth this year and confidence in volume growth longer term?

A: Confident in the global footprint and strategy, noting volumes have grown 0.5% on average since pre-COVID and long-term industry growth outlook.

Q: To what extent is margin improvement permanent and how to think about organic EBITDA growth in better volume context?

A: Fundamental drivers of margins intact, controlling costs and productivity, with opportunities to improve margins looking forward.

Q: Key learnings from U.S. performance and if applicable to other regions?

A: Consistency in long-term plan, portfolio choices, and investments, with learnings embedded in global plans for megabrands and innovation.

Q: Consumer slowdown in Mexico and Brazil beer volumes decline beyond weather?

A: Mexico had weather impacts but underlying demand strong; Brazil soft industry due to weather and revenue management, expecting better second half with price adjustments.

Q: On China on-premise channel and Brazil market share trends?

A: China on-trade channel weak, focusing on off-trade; Brazil industry soft, monitoring economy and consumer confidence.

Q: U.S. industry decline impact on profit and levers; share buybacks?

A: U.S. portfolio momentum and productivity levers to continue profit growth; capital allocation plans disciplined with increased flexibility due to cash flow.

Q: Volume growth medium term and FIFA 2026 activation?

A: Confident in long-term volume growth due to global footprint, FIFA 2026 as a large opportunity for category activation.

Q: Reinvigorating Bud and Bud Light in U.S. and volume growth in Europe?

A: Opportunities to rebalance portfolio and grow in Europe with premiumization and market progress.

Q: China consumption shift and India investment?

A: China reweighting sales force to off-trade; India has long-term growth prospects with strong premium business.