Anheuser Busch InBev : Reports Third Quarter and Nine Month 2020 Results

Brussels / 29 October 2020 / 7.00am CET

Regulated and inside information1

Anheuser-Busch InBev Reports

Third Quarter and Nine Month 2020 Results

"Our third quarter results reflect our fundamental strengths as the world's leading brewer and the resilience of the global beer category. We delivered a strong and balanced top-line performance by quickly adapting to meet the evolving needs of our customers and our consumers. In an ongoing volatile and uncertain environment, we remain focused on being part of the solution by prioritizing the health and well-being of our people, communities and customers." - Carlos Brito, CEO

KEY FIGURES

• Revenue: Revenue grew by 4.0% in 3Q20, positively impacted by a healthy volume performance and revenue per hl growth of 2.3%. In 9M20, revenue declined by 6.8% with revenue per hl growth of 1.6%.
• Volume: Total volumes grew by 1.9% in 3Q20, with own beer volumes up by 2.6% and non-beer volumes down by 2.5%. In 9M20, total volumes declined by 8.2%, with own beer volumes down by 8.3% and non-beer volumes down by 5.9%.
• Global Brands: Combined revenues of our global brands, Budweiser, Stella Artois and Corona, increased by 6.8% globally and by 8.1% outside of their respective home markets in 3Q20. In 9M20, the combined revenues of our global brands declined by 7.2% globally and by 7.5% outside of their respective home markets.
• Cost of Sales (CoS): CoS increased by 9.6% in 3Q20 and by 8.3% on a per hl basis, driven primarily by supply chain adjustments implemented to meet evolving demand. In 9M20, CoS increased by 1.4% and increased by 10.8% on a per hl basis.
• EBITDA: EBITDA of 4 892 million USD represents a decrease of 0.8% in 3Q20, with EBITDA margin contraction of 188 bps to 38.2%. In 9M20, EBITDA declined by 16.7% to 12 254 million USD and EBITDA margin contracted by 432 bps to 35.9%.
• Net finance results: Net finance costs (excluding non-recurring net finance results) were 1 333 million USD in 3Q20 compared to 677 million USD in 3Q19. Net finance costs were 5 537 million USD in 9M20 compared to 2 047 million USD in 9M19. The increase in 9M20 was primarily driven by a mark-to-market loss of 1 747 million USD linked to the hedging of our share-based payment programs compared to a gain of 1 672 million USD in 9M19, resulting in a swing of 3 419 million USD.
• Income taxes: Normalized effective tax rate (ETR) increased from 22.6% in 3Q19 to 26.2% in 3Q20. Excluding the impact of gains and losses relating to the hedging of our share-based payment programs, our normalized ETR was 26.0% in 3Q20 compared to 26.8% in 3Q19. Normalized ETR increased from 22.8% in 9M19 to 37.2% in 9M20 and, excluding the impact of gains and losses relating to the hedging of our share-based payment programs, normalized ETR decreased from 27.2% in 9M19 to 24.3% in 9M20.
• Non-recurringitems: Normalized EBIT excludes negative non-recurring items of 92 million USD in 3Q20 and 969

million USD in 9M20.

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. Except where otherwise stated, the comments below are based on organic growth figures and refer to 3Q20 versus the same period of last year.

For important disclaimers please refer to pages 15 and 16.

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• Profit: Normalized profit attributable to equity holders of AB InBev was 1 578 million USD in 3Q20 compared to 2 412 million USD in 3Q19 and was 1 654 million USD in 9M20 versus 7 125 million USD in 9M19. Underlying profit (normalized profit attributable to equity holders of AB InBev excluding mark-to-market gains and losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 1 601 million USD in 3Q20 compared to 1 870 million USD in 3Q19, and was 3 407 million USD in 9M20 compared to 5 462 million USD in 9M19.
• Earnings per share (EPS): Normalized EPS in 3Q20 was 0.79 USD, a decrease from 1.22 USD in 3Q19. Normalized EPS in 9M20 was 0.83 USD, a decrease from 3.59 USD in 9M19. Underlying EPS (normalized EPS excluding mark-to-market gains and losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 0.80 USD in 3Q20, a decrease from 0.94 USD in 3Q19, and was 1.71 USD in 9M20, a decrease from 2.76 USD in 9M19.
• Interim Dividend: While our business is delivering improving results, we continue to face uncertainty and volatility arising from the COVID-19 pandemic. In that context, our Board determined that it would be prudent and in the best interest of the Company to forgo the interim 2020 dividend payment. This decision is consistent with our financial discipline and prioritizes our deleveraging commitments, which have been impacted by the COVID-19 pandemic. The Board's proposal with respect to a full year 2020 dividend will be announced with our FY20 results on 25 February 2021.

MANAGEMENT COMMENTS

Delivering Strong Results in a Challenging Environment

Our third quarter results reflected our fundamental strengths as a company and the ongoing resilience of the global beer category. Revenue grew by 4.0% in 3Q20, with a healthy balance of total volume growth of 1.9% and revenue per hl growth of 2.3%. Top-line growth was offset by higher CoS as we rapidly adjusted our supply chain to meet evolving demand, resulting in a slight EBITDA decline of 0.8% with margin contraction of 188 bps to 38.2%.

• Successful commercial strategy executed with a best-in-class brand portfolio: Our global brands and High End Company outperformed this quarter, with the global brand portfolio revenue increasing by 8.1% (outside of the brands' home markets) and the High End Company revenue up by 6.5%, demonstrating the continued strength of the premiumization trend. We also improved our performance in our core portfolio, as consumers gravitated toward established brands that they know and trust. Growth was further enhanced by highly successful innovations, including Brahma Duplo Malte in Brazil and Bud Light Seltzer in the US.
• A relentless commitment to operational excellence and agility driving market share gains: With a best-in-classglobal supply chain and unparalleled scale, we are exceling with our customers in service level and product availability. We gained market share in the majority of our key markets this quarter by combining the strength of our operations with a winning commercial strategy and unrivaled brand portfolio.
• Confidence in the resilience of our business and the global beer category: Consumers quickly adjusted to the new reality by shifting to in-homeconsumption occasions, increasing adoption of the e-commercechannel and finding new ways to connect with others. Our teams pivoted quickly to meet these evolving consumer needs, resulting in beer volume growth of 2.6% even in the context of ongoing global on-premiserestrictions.

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Committed to Deleveraging while Proactively Managing our Debt Portfolio

We continue to exercise financial discipline and support the long-term growth of our business by proactively managing the factors within our influence.

• Forgoing the 2020 interim dividend payment to prioritize deleveraging commitments: While our business is delivering improving results, we continue to face uncertainty and volatility arising from the COVID-19pandemic. In that context, our Board determined that it would be prudent and in the best interest of the Company to forgo the interim 2020 dividend payment. This decision is consistent with our financial discipline and prioritizes our deleveraging commitments, which have been impacted by the COVID-19pandemic. The Board's proposal with respect to a full year 2020 dividend will be announced with our FY20 results on 25 February 2021.
• Proactive measures significantly reduced upcoming liabilities: Since 30 June 2020, we successfully redeemed approximately 11.4 billion USD of near-termdebt through a combination of tender and make-wholeexercises while extending the weighted average maturity of our bond portfolio.

Scaling New Digital Capabilities to Create Value for Customers and Consumers

We are seeing a rapid acceleration in trends such as online B2B platforms, e-commerce and digital marketing. We have been investing in these capabilities for many years, as we advance toward being a truly customer- and consumer-centric organization.

• Digitizing our relationships with our customers: By establishing a digital connection through our proprietary B2B platform, BEES, we are providing our customers with convenience, seamless communication and, most importantly, enhanced business performance. We are expanding the platform to more markets and seeing rapid adoption, with our number of global B2B users increasing by nearly 40% in the quarter.
• Consistent investments in e-commerce platforms are positioning us to lead online beer sales: Our direct-to-consumer initiatives offer convenience and leverage valuable data that allows us to stay one step ahead of emerging trends. Proprietary platforms and our third-partypartnerships both rapidly accelerated over the past several months, establishing our e-commerceleadership in key markets. In Brazil, Zé Delivery uses technology to connect existing retail networks to consumers and continues to gain traction. It is now present in all 27 Brazilian states and saw a significant acceleration in the number of orders completed in 3Q20.
• Finding new ways for our brands to connect with consumers: With our in-houseagency, draftLine, we are building and delivering consumer-firstmarketing executions. The agility of draftLine has proven key to our business in the changing COVID-19environment. In the UK, we leveraged PerfectDraft, our all-in-oneappliance that serves fresh draught beer at home. PerfectDraft and draftLine identified an opportunity to celebrate Oktoberfest at home following its cancellation. Together, they successfully developed, launched, and optimized a full digital, outdoor and TV campaign. This more than quadrupled the growth rate of home draught machine sales versus last year during the campaign, highlighting the benefits of owning the insights and creative process internally.

Fundamental Strengths Position Us Favorably for a Strong Recovery

While we expect our performance in the second half of this year to be better than the first, the environment remains volatile and uncertain, especially as some governments are renewing restrictions in several markets. We will leverage the fundamental strengths of our company - our diverse geographic footprint with access to high-growth regions, our clear commercial strategy, the world's most valuable portfolio of beer brands, industry-leading profitability and, most importantly, our talented team of true owners - to continue our momentum in this fast-changing environment and drive the business forward toward a strong recovery.

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Figure 1. Consolidated performance (million USD)

	3Q19	3Q20	Organic
			growth
Total Volumes (thousand hls)	143 417	146 612	1.9%
AB InBev own beer	127 254	130 734	2.6%
Non-beer volumes	15 227	14 854	-2.5%
Third party products	936	1 023	-16.3%
Revenue	13 172	12 816	4.0%
Gross profit	8 032	7 561	0.4%
Gross margin	61.0%	59.0%	-212 bps
Normalized EBITDA	5 291	4 892	-0.8%
Normalized EBITDA margin	40.2%	38.2%	-188 bps
Normalized EBIT	4 114	3 754	-2.2%
Normalized EBIT margin	31.2%	29.3%	-188 bps
Profit from continuing operations attributable to equity holders of AB InBev	2 930	1 039
Profit attributable to equity holders of AB InBev	3 003	1 039
Normalized profit attributable to equity holders of AB InBev	2 412	1 578
Underlying profit attributable to equity holders of AB InBev	1 870	1 601
Earnings per share (USD)	1.51	0.52
Normalized earnings per share (USD)	1.22	0.79
Underlying earnings per share (USD)	0.94	0.80
#REF!
	9M19	9M20	Organic
			growth
Total Volumes (thousand hls)	419 448	386 189	-8.2%
AB InBev own beer	371 398	341 028	-8.3%
Non-beer volumes	45 126	42 432	-5.9%
Third party products	2 924	2 730	-19.3%
Revenue	38 994	34 114	-6.8%
Gross profit	23 902	19 762	-11.9%
Gross margin	61.3%	57.9%	-338 bps
Normalized EBITDA	15 735	12 254	-16.7%
Normalized EBITDA margin	40.4%	35.9%	-432 bps
Normalized EBIT	12 293	8 856	-23.1%
Normalized EBIT margin	31.5%	26.0%	-554 bps
Profit from continuing operations attributable to equity holders of AB InBev	8 748	-2 916
Profit attributable to equity holders of AB InBev	9 058	-860
Normalized profit attributable to equity holders of AB InBev	7 125	1 654
Underlying profit attributable to equity holders of AB InBev	5 462	3 407
Earnings per share (USD)	4.57	-0.43
Normalized earnings per share (USD)	3.59	0.83
Underlying earnings per share (USD)	2.76	1.71

Figure 2. Volumes (thousand hls)

	3Q19	Scope	Organic	3Q20	Organic growth
			growth		Total Volume	Own beer volume
North America	29 009	85	436	29 530	1.5%	1.5%
Middle Americas	33 272	286	-1 104	32 454	-3.3%	-2.1%
South America	31 599	32	4 641	36 272	14.7%	20.0%
EMEA	21 807	-10	-1 419	20 378	-6.5%	-6.3%
Asia Pacific	27 498	26	135	27 659	0.5%	0.5%
Global Export and Holding Companies	231	-16	102	317	51.0%	48.7%
AB InBev Worldwide	143 417	404	2 791	146 612	1.9%	2.6%

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