AB InBev Reports Full Year and Fourth Quarter 2022 Results

All-time high full year volumes and double-digit revenue growth

BRUSSELS -- (BUSINESS WIRE) --

AB InBev (Brussel:ABI) (BMV:ANB) (JSE:ANH) (NYSE:BUD):

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230301006162/en/

“We delivered all-time high full-year volumes with accelerated revenue per hl, resulting in 11.2% revenue growth and EBITDA growth at the top-end of our outlook. Underlying EPS increased by 5.2% and another year of strong free cash flow generation resulted in deleveraging to a net debt to EBITDA ratio of 3.51x.” – Michel Doukeris, CEO, AB InBev

The 2022 Full Year Financial Report and 2022 ESG Report are available on our website at www.ab-inbev.com.

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 18.

Management comments

Creating a future with more cheers

Our business delivered another year of broad-based growth resulting in record high volumes and strong top- and bottom-line results. This was driven by the consistent execution of our strategy and strength of the beer category globally.

While 2022 was not without its challenges, including economic uncertainties, elevated input costs and supply chain disruptions which continued to constrain our full growth potential, we are pleased that our company once again delivered EBITDA growth at the upper end of our medium-term growth ambition and outlook for the year. Our performance is a direct result of our fundamental strengths and strategic choices, as we continued to invest in our brands, capabilities and accelerated digital transformation, while optimizing our business.

We continue to invest in our people and evolve our culture with important enhancements to our operating model to further embed a long-term growth and value creation mindset throughout our organization.

Delivering consistent growth

Our momentum continued in FY22, with our business delivering top-line growth of 11.2% with a volume increase of 2.3%. Revenue per hl increased by 8.6%, accelerating in the second half of the year driven by revenue management initiatives and continued premiumization. As a result of our record high volumes and top-line growth across all operating regions, our reported revenue is now approximately 5.5 billion USD ahead of FY19 pre-pandemic levels with volumes 5.8% ahead.

EBITDA increased by 7.2%, as our top-line growth was partially offset by anticipated transactional FX and commodity cost headwinds and higher selling, general and administrative expenses due primarily to elevated costs of distribution. Underlying USD earnings per share increased by 5.2%.

Progressing our strategic priorities

We made significant progress in FY22 across each of our three strategic pillars to deliver consistent growth and build on our platform for superior long-term value creation.

• Lead and grow the category
       
       Driven by the      investment in our marketing capabilities and consistent execution of our      five proven and scalable category expansion levers, our FY22 volumes      reached a new all-time high with growth across more than 60% of our      markets.
       
       2022 was a marquee year for our brands and marketing teams. At the Cannes      Lions International Festival of Creativity we were awarded 50 Lions, a      record high for our company, across nine different brands and were honored      to be recognized as the Creative Marketer of the Year. Following this      recognition of our creative marketing capabilities we were also named the      World’s Most Effective Marketer in the Global Effie Effectiveness Index.
       
       Consistent investment in our brands and disciplined innovation are key      enablers of our strategy and momentum. We increased our marketing      investments organically in FY22 while improving effectiveness through our      best-in-class creativity, advanced digital transformation and in-house      creative agency, DraftLine. Leveraging our ‘seed-launch-sustain’ approach,      in FY22 innovations introduced over the last three years contributed 5      billion USD in revenue. We are driving strong consumer connection with our      brands which resulted in a new record high overall portfolio Brand Power.

• Inclusive Category: In FY22, the percentage of       consumers purchasing our portfolio of brands increased across more than       70% of our focus markets, according to our estimates. This increase in       participation was led by female consumers, driven by the expansion of       brands and packs in our premium and Beyond Beer portfolios.

• Core Superiority: Our mainstream portfolio       delivered high-single digit revenue growth in FY22 and outperformed the       industry in the majority of our key markets, according to our estimates.       The strength of our core portfolio and the beer category across our       emerging and developing markets in Africa and Middle Americas delivered a       particularly strong performance, growing volumes by mid-single digits in       aggregate.

• Occasions Development: We continue to focus on       expanding the beer category to reach more consumers on more occasions.       Our no-alcohol beer portfolio delivered another year of double-digit       revenue growth with our performance driven by Budweiser Zero, which was the       #1 no-alcohol beer by volume in the US in 4Q22, and the expansion of       Corona Cero throughout Europe. In addition, our digital       direct-to-consumer solutions are enabling us to develop new consumption       occasions and delivered low-teens revenue growth in FY22 versus last       year.

• Premiumization: Our broad portfolio of above       core beer offerings continues to lead the segment globally and grew       revenue by low-teens in FY22. Corona and Stella Artois led the growth of       our global brands with a revenue increase of 18.6% and 11.7%       respectively, outside of their home markets. Budweiser grew by 2.5%       outside of the US, despite the impact of COVID-19 restrictions in China,       the brand’s largest market.

• Beyond Beer: In FY22, our Beyond       Beer business contributed approximately 1.6 billion 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 South Africa, Brutal Fruit       and Flying Fish delivered 18% revenue growth. In the US, within the       spirits-based ready-to-drink segment, Cutwater and NÜTRL vodka seltzer       combined grew revenues by over 70% with volumes ahead of the industry.

• Digitize and monetize our ecosystem
       
       Our      accelerated digital transformation is a key competitive advantage of our      business, improving the way we connect with our ecosystem of two billion      consumers and six million customers. We are driving incremental growth      through our digital products and expanding the beer category into more      occasions. While we are energized by our progress, we believe we are      likely only scratching the surface of what is possible.

• Digitizing our relationships       with our more than six million customers globally: BEES is live in 20 markets       with approximately 63% of our revenues now through B2B digital platforms.       In FY22, BEES reached 3.1 million monthly active users and captured       approximately 32 billion USD in gross merchandise value (GMV), growth of       over 60% versus FY21. BEES Marketplace is now live in 15 countries and       captured approximately 950 million USD in GMV from sales of third-party       products, generating incremental revenue of 850 million USD for our       business. As of 4Q22, over 55% of BEES customers in these countries were       also BEES Marketplace buyers.

• Leading the way in DTC       solutions: Our       omnichannel direct-to-consumer (DTC) ecosystem of digital and physical       products generated revenue of approximately 1.5 billion USD this year,       mid-teens growth versus 2021. Our digital DTC products, Ze Delivery, TaDa       and PerfectDraft are now available in 17 markets, and in FY22 generated       over 450 million USD in revenue and fulfilled 69 million orders. Our       network of physical retail products, such as Modelorama in Mexico and Pit       Stop in Brazil, continued to deliver revenue growth across our footprint       of approximately 13 000 stores.

• Unlocking value from our       ecosystem: In       FY22, we completed the construction of our first scale manufacturing       facility for EverGrain in St. Louis to upcycle our saved barley into high       value plant-based protein ingredients.

• Optimize our business
       
       Our objective      to maximize long-term value creation is driven by our focus on three      areas: disciplined resource allocation, robust risk management and an      efficient capital structure. We continued to deliver strong free cash flow      in FY22, generating approximately 8.5 billion USD, and as a result we have      made significant further progress on our deleveraging journey. Gross debt      reduced by 8.9 billion USD to reach 79.9 billion USD, resulting in net      debt of 69.7 billion USD and a net debt to EBITDA ratio of 3.51x as of 31      December 2022.
       
       We maintain a strong liquidity position of approximately 20.0 billion USD,      consisting of 10.1 billion USD available under our Sustainability-Linked      Loan Revolving Credit Facility and 9.9 billion USD of cash. Our bond      portfolio has a very manageable pre-tax coupon of approximately 4% with      95% of the portfolio fixed rate, a weighted average maturity of greater      than 15 years and no relevant medium-term refinancing needs.
       
       As a result of our continued momentum, strong free cash flow generation      and deleveraging progress, the AB InBev Board of Directors has proposed a      full year dividend of 0.75 EUR per share, a 50% increase versus 2021.

Advancing our sustainability priorities

We continue to deliver on our sustainability agenda to enable our commercial vision and fulfill our company purpose. We remain committed to the principles of the United Nations Global Compact. As part of our Smart Drinking program, we believe that through the power of our brands and marketing we can drive positive behavior change in society and reduce harmful consumption of alcohol. We invested over 700 million USD from 2016-2022 in social norms marketing campaigns and are on track to deliver our 1 billion USD goal by 2025.

In recognition of our leadership in corporate transparency and performance on climate change and water security we were recognized by CDP with a double A score and awarded the Gold Medal for International Corporate Achievement in Sustainable Development by the World Environment Center. We are also proud to be included in the 2023 Bloomberg Gender-Equality Index, a reference index that tracks the performance of public companies that have demonstrated their commitment to gender equality in the workplace.

We continued to make progress towards our ambitious 2025 Sustainability Goals. We contracted 97% of our global purchased electricity volume from renewables with 67.6% operational, and since 2017, we reduced our absolute GHG emissions across Scopes 1 and 2 by 39% and GHG emissions intensity across Scopes 1, 2 and 3 by approximately 21%. In Sustainable Agriculture, 89% of our direct farmers met our criteria for skilled, 72% for connected and 72% for financially empowered. In Water Stewardship, 100% of our sites located in high stress areas started implementation of solutions with six sites already seeing measurable impact. For Circular Packaging, 77% of our products were in packaging that was returnable or made from majority recycled content. We are also progressing on our ambition to achieve net zero by 2040, reaching carbon neutrality at an additional ten facilities in FY22, now totaling thirteen globally.

Please refer to our 2022 ESG report here for further details.

Creating a future with more cheers

Looking ahead to 2023, we believe the strength of the beer category remains fundamentally attractive as it is big, profitable and growing. While the operating environment may continue to be dynamic, we are laser-focused on executing our strategy and our business has momentum. Our strategic choices this year across revenue management, organizational structure and commercial investment position us well to continue delivering consistent profitable growth. We have an industry leading portfolio of brands across all price points, an advantaged geographic footprint with leading positions in most of the world’s largest beer profit pools and growth regions, and advanced digital products that are bringing us closer than ever to our customers and consumers. We are investing in our brands, facilities and digital transformation to support our organic growth potential and optimizing our financial profile through disciplined resource allocation and everyday efficiency.

Our performance this year would not have been possible without the passion and deep ownership culture of our people. Our teams worked with relentless commitment and high engagement throughout the year to deliver on our strategic and financial objectives and we take this opportunity to thank all our colleagues globally for their hard work and dedication.

Our continued momentum and the significant opportunities to deliver growth across our three strategic pillars reinforce our confidence in our ability to generate superior long-term value and deliver on our purpose to Dream Big to Create a Future with More Cheers.

2023 Outlook

1. 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.

2. 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%.

3. Effective Tax Rates (ETR): We expect the normalized ETR      in FY23 to be in the range of 27% to 29% excluding any gains and losses      relating to the hedging of our share-based payment programs. The ETR outlook      does not consider the impact of potential future changes in legislation.

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

Key Market Performances

United States: Continued portfolio rebalancing delivered another year of top-line growth and stable EBITDA despite the elevated cost environment

• Operating performance:

• 4Q22: Revenue grew by 2.5% with       revenue per hl increasing by 12.2%, driven primarily by price increases       and other revenue management initiatives. Our sales-to-retailers (STRs)       declined by 7.6%, primarily driven by a soft industry which was impacted       by phasing of price increases and poor weather in December. Our sales-to-wholesalers       (STWs) were down by 8.6%. EBITDA grew by 3.1%.

• FY22: Revenue grew by 2.3% with       revenue per hl growth of 6.7%. Our STWs were down by 4.2% and STR’s       declined by 4.1%, estimated to be below the industry. EBITDA was flat.

• Commercial highlights: Top-line growth continued      this year, driven by the consistent execution of our commercial strategy      and accelerated investment to rebalance our portfolio towards growing      segments. In FY22, our above core beer and Beyond Beer brands generated      over 40% of our revenue and our total business has now delivered over 850      million USD revenue growth versus FY19 pre-pandemic levels. Our above core      beer portfolio outperformed the industry in FY22, led by Michelob ULTRA      which grew volumes by high-single digits and by the growth of our premium      brands including Stella Artois, Kona Big Wave and Estrella Jalisco. In      Beyond Beer, our spirits-based ready-to-drink portfolio grew volume by      strong double-digits and continued to outperform the industry, led by      Cutwater, the #1 spirits-based cocktail in the country, and NÜTRL, the      industry’s #2 vodka seltzer.

Mexico: Double-digit top- and bottom-line growth with record high volumes

• Operating performance:

• 4Q22: Revenue grew by low-twenties       with revenue per hl growth of mid-teens, driven by revenue management       initiatives and premiumization. Our volumes grew by mid-single digits as       we continued to outperform the industry. EBITDA grew by mid-teens.

• FY22: Top-line grew by almost 20%       with high-single digit volume growth and a revenue per hl increase of       more than 10%. EBITDA increased by mid-teens.

• Commercial highlights: In FY22, we delivered volume      growth across all segments of our portfolio, with our above core beer      brands growing over 20%, led by Modelo, Pacifico and Michelob ULTRA. In      4Q22, we completed the final wave of our Oxxo channel expansion with our      portfolio now available in approximately 20 000 Oxxo stores nationwide. We      continued to progress our digital transformation with over 60% of our BEES      customers now also BEES Marketplace buyers and our digital DTC platform,      TaDa, now fulfilling over 300 000 orders per month.

Colombia: Double-digit top- and bottom-line growth with record high per capita consumption

• Operating performance:

• 4Q22: Revenue increased by over 20%       with volume growth of mid-single digits and mid-teens revenue per hl       growth, driven by revenue management initiatives and premiumization.       EBITDA grew by high-teens.

• FY22: Revenue grew by low-twenties       with volume increasing by high-single digits and revenue per hl growth of       low-teens. EBITDA grew by low-teens.

• Commercial highlights: Led by the consistent      implementation of our category expansion levers, the beer category      continues to grow, gaining 80bps share of total alcohol this year and with      2022 marking the highest beer per capita consumption in over 25 years. In      FY22, we delivered volume growth across all segments of our portfolio. Our      premium and super premium brands led the way, delivering over 25% volume      growth and reaching an all-time high volume and share of our total      revenue. More than 45% of our BEES customers are now also BEES Marketplace      buyers.