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):

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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

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.

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.