Earnings call transcript: Anheuser Busch InBev Q2 2025 sees stock drop 11.57%

Anheuser Busch InBev (BUD) reported its earnings for the second quarter of 2025, showcasing a solid financial performance with increases in EBITDA and revenue. The company, which has maintained dividend payments for 25 consecutive years and raised them for the past three years, continues to demonstrate financial stability. Despite these positive results and two analysts revising earnings estimates upward, the stock experienced a significant decline, dropping 11.57% to close at $51.36, down from its previous close of $58.08. The stock’s decline comes amidst a broader analysis of market conditions and company-specific challenges.

According to InvestingPro analysis, BUD offers investors 8 additional key insights about its financial health and market position. Discover comprehensive valuation metrics and expert analysis in the Pro Research Report, available exclusively to subscribers.

Key Takeaways

• EBITDA rose by 6.5%, while revenue grew by 3%.
• Non-alcoholic beer portfolio revenue surged by 33%.
• Stock price fell by 11.57% following the earnings release.
• Volumes declined by 1.9%, affected by markets in China and Brazil.
• Strong brand performance with Corona and Budweiser leading global rankings.

Company Performance

Anheuser Busch InBev’s performance in Q2 2025 was marked by robust growth in several key financial metrics. The company reported a 6.5% increase in EBITDA and a 3% rise in revenue. Despite these gains, volume declines of 1.9% in China and Brazil highlighted ongoing market challenges. The company continues to leverage its strong brand portfolio, with Corona and Budweiser maintaining top positions globally, and Michelob Ultra and Stella Artois improving in brand rankings.

Financial Highlights

• Revenue: Increased by 3% year-over-year.
• EBITDA: Up by 6.5%.
• Underlying EPS: Grew 8.7% in USD and 17.4% in constant currency.
• Free cash flow: Increased by $5 billion compared to the previous year.
• Net debt to EBITDA ratio: Improved to 3.27x from 3.42x year-over-year.

Market Reaction

Following the earnings announcement, Anheuser Busch InBev’s stock price dropped by 11.57%, closing at $51.36. This decline marks a significant movement within the context of its 52-week range, which has seen a high of $63 and a low of $45. The stock’s performance reflects investor concerns over volume declines and broader market conditions, despite positive financial results.

Outlook & Guidance

Looking forward, Anheuser Busch InBev remains confident in its ability to deliver 4-8% EBITDA growth for 2025. The company anticipates a normalization of consumer purchasing power and sees major events like the FIFA 2026 and Winter Olympics as key opportunities for category activation. Continued focus on premiumization and innovation is expected to drive growth.

Executive Commentary

CEO Michel DeKarris emphasized the long-term growth potential, stating, "We continue to believe that the long-term category opportunity in our business, because of our footprint, remains in place for us to deliver growth in the long term." CFO Fernando Tenenbaum highlighted the company’s resilience, saying, "Our results in the first half of the year, the resilience of our strategy and the strength of our mega brands all reinforce our confidence in our ability to deliver on our 2025 outlook."

Risks and Challenges

• Volume declines in key markets such as China and Brazil.
• Ongoing inflation impacting consumer purchasing power.
• Soft consumer confidence levels below historical averages.
• Potential supply chain disruptions and market saturation.
• Competitive pressures in global beer markets.

Q&A

During the earnings call, analysts raised questions about the company’s strategy to address volume challenges in China and Brazil. Executives discussed plans for expanding the off-trade channel in China and highlighted growth potential for brands like Michelob Ultra and Busch Light. Concerns about consumer spending constraints were also addressed, with a focus on strategic marketing investments.

Full transcript - Anheuser Busch Inbev SA (ABI) Q2 2025:

Conference Operator, AB InBev: AB InBev’s Second Quarter twenty twenty five Earnings Call and Webcast will begin momentarily. As a reminder, there will be slides accompanying today’s call. To access the slides, please visit AB InBev’s website now at www.abinbev.com and click on the Investors tab and the Results Center page. If for some reason you are unable to view the slides during the call, we suggest that you download the PDF of the presentation from the AB InBev Investor Relations website and follow along. AB InBev’s Second Quarter twenty twenty five Earnings Call and Webcast will begin momentarily.

As a reminder, there will be slides accompanying today’s call. To access the slides, please visit AB InBev’s website now at www.abinbev.com and click on the Investors tab and the Results Center page. If for some reason you are unable to view the slides during the call, we suggest that you download the PDF of the presentation from the AB InBev Investor Relations website and follow along. Welcome to AB InBev’s Second Quarter twenty twenty five Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr.

Michel DeKarris, Chief Executive Officer and Mr. Fernando Tenenbaum, Chief Financial Officer. To access the slides accompanying today’s call, please visit AB InBev’s website at www.abinbev.com and click on the Investors tab in the Reports and Results Center page. Today’s webcast will be available for on demand playback later today. At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions following the presentation.

Some of the information provided during the conference call may contain statements of future expectations and other forward looking statements. These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev’s actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in these forward looking statements. For a discussion of some of the risks and unimportant factors that could affect AB InBev’s future results, see Risk Factors in the company’s latest annual report on Form 20 F filed with the Securities and Exchange Commission on 03/12/2025. AB InBev assumes no obligation to update or revise any forward looking information provided during the conference call and shall not be liable for any action and reliance upon such information.

It is now my pleasure to turn the floor over to Mr. Michel DeKarris. Sir, you may begin.

Michel DeKarris, Chief Executive Officer, AB InBev: Thank you, and welcome, everyone, to our second quarter twenty twenty five earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our operating highlights and provide you with an update on the progress we have made in executing our strategic priorities this quarter. After that, we’ll be happy to answer your questions. Let’s start with the key highlights.

The consistent execution of our strategy delivered another quarter of solid results, with EBITDA increasing by 6.5% and continued margin expansion. The performance of our premium brands and the strategic choices we made in revenue management drove an acceleration in our revenue per hectoliter growth, increasing by 4.9 versus last year. In The U. S, our portfolio is continuing to build momentum and gain share of the industry. We are continuing to increase our investments in our brands to fuel growth.

Our non alcohol beer portfolio continued to outperform globally, increasing revenues by 33. The growth of Beers Marketplace accelerated this quarter, increasing GMV by 63% versus last year to reach $785,000,000 And the ongoing optimization of our business drove an 8.7% increase in underlying U. S. Dollar EPS and a $05,000,000,000 increase in free cash flow. Turning to our operating performance.

Volumes declined by 1.9%, impacted by soft industries and performance in China and Brazil. While overall volumes were below potential, the underlying momentum in markets representing the remaining two thirds of our business continued, with volume growth of 0.7%. Double clicking on these two markets, first, Brazil. The majority of our volume decline was driven by a soft industry, which was impacted by adverse weather conditions. During the second quarter, we made strategic revenue management choices to position the business well for the second half of the year.

Second, in China, the quarter two industry volume trends were in line with the first quarter, declining by low single digits versus last year. But our volumes underperformed with continued weakness in our regions and channels. Moving back to the global results, top line growth accelerated with revenue increasing by 3% this quarter versus last year. EBITDA increased by 6.5%. And the continued optimization of our business drove operating leverage through the P and L, resulting in EPS growth of 17.4% in constant currency and 8.7 in U.

S. Dollar terms. Our diversified geographic footprint enables us to deliver consistent results. Revenue increased in 70% of our markets, and we delivered top and bottom line growth across four of our five operating regions. Now, I’ll take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America.

In The U. S, the momentum of our portfolio continued, and we are increasing investments in our brands to fuel growth, Led by Michelob Ultra and Busch Light, the number one and number two volume share gainers in the industry, our market share momentum accelerated and we delivered both top and bottom line growth. And in the spirits based like this, our portfolio grew volumes by low teens, led by Cutwater and Neutrol. Now, moving to Middle Americas. In Mexico, our volumes grew by low single digits, is likely ahead of the industry, which benefited from Easter shipment phasing, but was negatively impacted by adverse weather in June.

Revenue increased by mid single digits with growth led by our above core beer portfolio. In Colombia, record high volumes drove high single digit top and bottom line growth, with our portfolio estimated to have gained its share of total alcohol. In Brazil, our revenue declined by 1.9%, impacted by volume performance. EBITDA increased by 5.3%, with margin expansion of two sixteen basis points, as productivity initiatives more than offset the top line decline in transactional FX headwinds. In South Africa, the underlying momentum of our business continued, gaining share of both beer and Beyond Beer.

Revenue and EBITDA grew by mid single digits, with our performance driven by premium and super premium brands, which grew volumes by mid teens. In Europe, an improved industry, continued premiumization of our portfolio, and further margin recovery, drove top and bottom line growth. Our volumes were flat, outperforming the industry in five of our six key markets, led by our mega brands and our non alcohol beer portfolio. While we are talking about Europe, I spent a lot of time with our team in the market over the last few months. And looking at the industry performance this quarter, we can see an interesting example of the resilience, momentum and relevance of the beer category.

With more normalized weather, the industry delivered flattish volumes and revenue growth with beer gaining share of total alcohol. In our developed markets, we have the opportunity to innovate, premiumize, increase category participation, and be present in more occasions to deliver profitable growth. To mention just a few examples from Europe, consumers are enjoying the taste of left with meals in France and Italy. The perfect serve of Stella Artois during Roland Garros and Wimbledon, celebrating one hundred years of the refreshing taste of Corona during the summer. The perfect draft experience at home in The UK, and our non alcohol beer portfolio in more occasions.

With the right portfolio, innovation, and focus on consumers and occasions, the category has attractive growth opportunities across our footprint. Now moving to APAC. In China, revenue declined by 6.2% with our volumes underperforming the industry. We are committed to our strategy and are taking action to strengthen our execution by increasing discipline and excellence in our road to market, increasing investments in our mega brands, accelerating our expansion in the in home channel, and scaling up key innovations such as having zero sugar. Now, let’s look at the key highlights of our three strategic pillars, starting with leading and growing the category.

We continue to invest in our mega brands and mega platforms. In the first half of the year, we invested $3,600,000,000 in sales and marketing, and have averaged more than $7,000,000,000 on an annualized basis over the last six years. Focused portfolio management, increasing market investments, and improved effectiveness drove an increase in brand power of our portfolio, led by our mega brands. This consistent investments in our brands are reinforcing the strength of our portfolio. According to Cantar brand Z, we own eight of the top 10 most valuable beer brands in the world.

Michelob Ultra and Stella Artois, two of our global mega brands, moved up in the rankings by one position to reach number five and number nine respectively. And Corona Budweiser continued to lead at the top two brands globally. We have evolved our portfolio management approach to focus our investments in our mega brands to drive efficient profitable growth. We have around 50 mega brands globally, typically five per market. And these brands continue to lead our growth, with net revenue increasing by 5.6%.

Our global mega brand Corona continued to drive premiumization across our markets, growing revenue by 7.7% outside of Mexico and growing volumes by double digits in more than 30 markets. Through the consistent execution of our category expansion levers, we are increasing category participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with no and low alcohol, low carb, zero sugar, and gluten free options. And we are expanding our premium and beyond beer portfolios. As a result, on a rolling twelve months basis, participation of legal drinking age consumers with our portfolio increased across our markets. In non alcohol beer, our portfolio momentum continued, with net revenue growing by 33%, led by the growth of Corona Cereal.

We are now leaders in seven of our top 13 non alcohol beer markets, and estimate to have gained share in 70% of them. With 65% of the volume coming from new consumers and new occasions. We believe non alcohol beer is a key opportunity to develop the category and drive incremental volume growth. Innovation is a key component of our ambition to drive increased participation, and develop new occasions. Two good examples of our innovation capabilities this year are both from our US business, where we are leading the industry innovation year to date.

Busch Light Apple is a seasonal offering that provides consumers with a crisp, refreshing taste, and was brought back to the market by popular demand after a three year absence. Since launch in May, the brand is now the number one innovation in the industry, driven primarily by twenty one to twenty four year old consumers, who had a six times higher rate of purchase for Busch Light Apple versus the industry average. Micheloboltrazero, with only 29 calories, is brewed for those consumers looking for a great tasting, zero alcohol, low calorie beer. Since launch early this year, the brand is the number two innovation in the industry, and is the number six volume share gainer in the overall beer category year to date. Let’s turn to our second strategic pillar, digitize and monetize our ecosystem.

In the second quarter, this captured $12,200,000,000 in gross merchandising value, a 10% increase versus last year. The growth of this marketplace accelerated, with GMV increasing by 63% versus last year, to reach $785,000,000 In DTC, our digital platforms continue to enable a one to one connection with our consumers, and help us in developing new consumption occasions. Our digital platforms generated $134,000,000 in revenue, an increase of 6%. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business. Thank you, Michelle.

Good morning. Good afternoon, everyone.

Fernando Tenenbaum, Chief Financial Officer, AB InBev: I’ll take a few minutes to discuss the progress we have made in optimizing our business. Our EBITDA margins improved by 116 basis points this quarter, with expansion in four of our five operating regions. We know that each quarter will be different, but we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time. Moving on to EPS. We delivered underlying EPS of $0.98 per share, an 8.7% increase in U.

S. Dollars and a 17.4% increase in constant currency versus last year. EBITDA growth accounted for a $0.16 per share increase with translational effects and zero eight dollars per share headwind. Lower net interest expense and the optimization of other below EBITDA line items drove the balance of our EPS growth. As we continue to focus on optimizing our business, in the first six months of this year, we increased our free cash flow by 5,000,000,000 versus last year through a combination of driving organic EBITDA growth, reducing our net interest expense through deleveraging, optimizing our net working capital, and improving the efficiency of our CapEx through disciplined resource allocation.

With this increase in cash generation, we continue to make progress on our deleveraging journey. Our net debt to EBITDA ratio reached 3.27 times, an improvement from 3.42 times year over year. As is typical, the ratio increased versus the full year given the seasonality of our cash generation, and increased cash outflow from our full year dividend and completion of our share buyback program. In the first half, we continue to strengthen our debt maturity profile by executing a bond redemption and issuance, allowing us to extend our average maturity, while maintaining our weighted average coupon. Our bond portfolio remains well distributed with no relevant near and medium term refinancing needs.

We have approximately US3 billion worth of bonds maturing through 2026 and no financial covenants. Our results in the first half of the year, the resilience of our strategy and the strength of our mega brands all reinforce our confidence in our ability to deliver on our 2025 outlook of 4% to 8% EBITDA growth. With that, I would like to hand it back to Michel for some final comments.

Michel DeKarris, Chief Executive Officer, AB InBev: Thanks, Fernando. Before opening for Q and A, I would like to take a moment to recap on the first half of the year and look ahead at the opportunities our brands have to activate the category. We are encouraged by our first half results as we deliver the EBITDA growth at the upper end of our outlook. Underlying EPS increased by high single digits in U. S.

Dollars and by 19% in constant currency. The performance of our premium brands and our revenue management decisions drove an acceleration in our revenue per hectoliter growth. Our diversified footprint is proving to be a strength, as our developed markets across The U. S, Canada and Europe showed a resilient performance, growing top and bottom line in the 2025. And as Fernando just mentioned, our first half performance and the strategic choices we have made position us well to deliver on our outlook for the year.

In the first half of this year, our brands met consumers in some of the most iconic events in sports and culture, developing new occasions and creating moments of celebration and cheers. Looking ahead to the second half, we are uniquely positioned to activate the category, from the NBA and NFL to celebrating one hundred years of Corona around the world. To the buildup of the Winter Olympics, we will be focused on connecting with consumers and bringing to life our purpose of creating a future with more cheers. With that, I’ll hand it back to the operator for the Q and A.

Conference Operator, AB InBev: Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. We do ask that while you pose your question, you pick up your handset to provide optimal sound quality. One moment please while we poll for your questions.

Our first questions come from the line of Mitch Collett with Deutsche Bank. Please proceed with your questions.

Mitch Collett, Analyst, Deutsche Bank: Hi, Michelle. Hi, Fernando. I’ve got two questions please. So firstly, given the volume decline in the first half and some of the headwinds you’ve seen that might persist into the second half. I guess it looks unlikely that you’ll achieve volume growth in fiscal twenty twenty five, but how comfortable are you without with not achieving volume growth this year?

And how do you think about volume growth longer term? I appreciate you won’t guide on fiscal twenty twenty six today, but how confident do you feel about volume growth going into fiscal twenty twenty six based on what you know today? And then the second question, I guess, is linked. Given those temporary headwinds to volume this quarter, you’ve actually had a pretty decent organic EBITDA growth delivery and you’re in the top half of your range. So to what extent is that margin improvement permanent?

And how should we think about organic EBITDA growth in a better volume context? Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Hi, Mitch. Good morning. Thanks for the question. So, I think that to start answering this question and talking about volume, it’s always good to remember the business that we have, which is a large one globally with operations in over 50 countries, selling beer in over 100 countries. And as we always say, this is a great footprint, because allows us to navigate different environments, and continue to deliver on a consolidated basis.

But of course, this can also time to time expose us for different countries, specific challenge. We are all aware of the slowdown in China, the reset in Argentina, just to mention a few of them. In the business that is as large as this one, difficult to draw conclusions on a quarter, or just taking one KPI volume, for example, you can look at the volume this quarter, or can look at the volume evolution over the last five years, since pre COVID, our volumes have been growing 0.5% on average. In this quarter specifically, driven by especially Brazil and the industry, where both countries had tough industries, but also our performance in China and in Brazil were below our expectation. This volume was not where we would like to be.

But if you go to other KPIs, and you look at what we deliver, of course, revenue all time high, EBITDA has been growing over and over in each quarter within the range that we have for the market. This is a year outlook, and we’ve been delivering EPS growth very consistent in constant currency, but also in dollars, growing eight percent this quarter, percent since 2021. And we continue to make progress on our cash flow that continues to improve year on year. I think that all of that to say, we remain confident on the footprint that we have, and the advantages of this footprint globally. The forecasts for the industry in the long run do not change.

This industry will continue to grow, is gaining share of growth, and we are confident on the business and the strategy that we are executing. I will leave Fernando with the second part of your question. Thank you.

Fernando Tenenbaum, Chief Financial Officer, AB InBev: Hi, Mitch, Fernando here. So, when you ask about margins, if you look like in the second quarter, the margin expanded by 116 basis points, and we expanded in four of our five operating regions. We don’t provide margin outlook, but we said several times before that 2025 looks to be more like a normal year of cost inflation, somewhat in line with inflation at quarters of markets for the year. But then when you double click, and you said that several times, and you look at the effects curves, we always had one year out. So we have a very good visibility on what is happening.

We expect the especially specifically Mexican pesos in Brazilian real, the phasing of cost inflations to be weighted from Q2 onwards. And then taking like a one step back and a broader picture. We also said several times that the EBITDA performance that we have, especially during the COVID years, has been driven by transaction effects and record high commodity prices, but none of these headwinds were structural. So, the fundamental drivers of our industry leading margins, they remain intact. So that’s to say that we’re controlling what we can control, and then we look forward, not specifically quarter by quarter, and look forward, we still see a lot of opportunities to improve margins.

Mitch Collett, Analyst, Deutsche Bank: Understood. Thank you both.

Conference Operator, AB InBev: Thank you. Our next questions come from the line of Rob Ottenstein with Evercore ISI. Please proceed with your questions.

Rob Ottenstein, Analyst, Evercore ISI: Great. Thank you very much. Michelle, the results in The U. S. Are really impressive.

It’s really it’s an incredible turnaround story and quite a success. As you kind of stand back and reflect on what you’ve accomplished in The U. S, what are the key learnings and are there things from The U. S. That you can transport learnings that you can transport to other regions to help improve performance in those areas as well?

Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Morning, Robert. Thanks for the question. So, U. S. Is being a topic in our calls and conversations over the last several years.

And I think that we always need to start with the idea that we proposed back then in 2017, this rebalance on our portfolio. And we have been since investing on the brands that we thought had potential for acceleration, and that were in line with what we saw as emerging and consolidating consumer trends. And our share momentum on this quarter two improved. So we are any cut you take from Surcana to BIR on the 60 to 70 bps. This growth so far has been led by Michelob Ultra and Busch Light.

And because the intentionality of the innovations that we had during the year, so less innovations, but more meaningful innovations. You get a boost on this share, especially on the quarter two, because we launched Michelob Ultra Zero on the quarter one, but really hit the sets on the quarter two, and Busch Light Apple came into as a seasonal in the quarter two. The learnings from this is consistency. We’ve been talking a lot about this. So, a long term plan, a very consistent view on the category, on our portfolio choices, and the investments we made for the long term.

We called somehow last year this inflection point, because we’ve been following a lot this percentage of brands on our portfolio growing, and where the industry is going. We see now a further acceleration that you don’t capture on this share on the beyond beer space, because a lot of our choices were in the ready to drink cocktails the vodka seltzer, but both consistent growth. And some of those things, of course, they are embedded in our plans globally. When you think about the ten year plan that we have the company, the mega brands choices, and the consistency on the investment behind these choices. But also for innovation and expansion of tools to increase penetration, such as the non alcohol, the gluten free, the zero sugar, and the beyond beer choices that we have.

So I think that there’s more for us to see in The U. S, there is much more for us to do. But so far, we are pleased with the current momentum and especially with the demand for the brands. So, Ultra continues to accelerate, Busch Light very well positioned, and the innovations are working hard to help and to support this growth.

Conference Operator, AB InBev: Thank you. Our next question is coming from the line of Olivier Nikolay with Goldman Sachs. Please proceed with your questions.

Olivier Nikolay, Analyst, Goldman Sachs: Hi, good morning. Michel from the Insurance. First of all, I’ve

Unidentified Speaker: got a follow-up on Mexico. I think in the press release, you commented that Mexico grew in the quarter, but in June, it was weak, blaming the weather. Is there any consumer slowdown in Mexico that you’re seeing at the end of

Olivier Nikolay, Analyst, Goldman Sachs: the quarter, which could have an impact in H2? And then the question is going back to the Brazil beer volumes decline. So beyond the weather, could you perhaps break down the key elements to explain the underperformance? Have you been increasing prices perhaps a bit too much or more than what you’re rest way more than the rest of the markets? And would you believe that volumes could bounce in H2 when it comes to mainstream beer?

Or is that something a

Michel DeKarris, Chief Executive Officer, AB InBev: bit more structural there? Thank you. Good morning, Olivier. Michel here. I’ll take, I think that the two questions, they are one more specific, one more broad.

Feel free to follow-up if I if I didn’t cover both of them. So I think that in Mexico, again, great industry, great business that we have in Mexico, volumes during the quarter, increases low single digits, outperformed the industry, results were good top to bottom. We had different components during the quarter. So I think you can remember several of them. So Easter shifting from quarter one to quarter two comparables because last year was a very strong quarter in Mexico.

I think we all remember that the government because of the elections had more spending on the first half of the year. And this helped the quarter two was a great quarter last year in terms of weather, as a matter of fact. I’m not sure if I captured it well, but it said something like blaming the industry. We actually just state the fact, we’re not blaming the weather, right? So, we’re just saying was cold, was rainy.

There was some storms in Mexico this quarter. So, the back end of the quarter was rather is low versus the beginning of the quarter because of Easter. But all in all, we delivered a great quarter, outperforming the industry, underlying demand for our brands remain very strong. As in many markets, and I think that this somehow connects the first part of the question with the second. What we see is that the economy continues to progress, but across the board we see consumer confidence, not at the high levels that we saw back then in 2022, for example.

And one would expect that at one point, as economy continues to progress, consumer confidence will converge, but we are not there yet. And more specifically, if you look at the different consumer cohorts by socioeconomic level, the more value seeking consumers, because of inflation, we see are under pressure in some specific markets. And when we look at the baskets, I’ll give an example of The US, the consumer baskets, different consumer cohorts, and socioeconomic levels are being somehow stable, like they are buying on average the same dollars that they usually buy. But we all know that the same dollars with inflation will mean less units being bought in the basket. And this is a point that we all need to be carefully monitoring and following.

Beer alcohol so far has been keeping the share of this basket stable. Any markets where the purchase power is already rebuilding. You take Europe, for example, that suffered more after COVID because of the cost of electricity and fuel and energy, because of this cost is normalizing, purchase power is recovering. Then you see the industry recovering in line, not only on the euros that people are spending, but also in quantity. So I think that situation globally for the consumer is economy continues to progress, consumer confidence below historical levels.

At one point, we all expect that this will converge, baskets somehow stable in dollars, euros, but where there is more inflation, consumers, of course, are most choiceful in their quantities. So we need to continue to monitor economy, do our job on the parts that we can control, and then we will see as we move forward those things converging, like purchase power, consumer confidence and volumes. Thank you.

Conference Operator, AB InBev: Thank you. Thank you. Our next questions come from the line of Sanjeev Ajla with UBS. Please proceed with your questions.

Sanjeev Ajla, Analyst, UBS: Hey, Michel, Fernando. A couple from my side, please. Firstly, on China, can you talk us through how you’ve seen the on premise channel progress through the quarter? On the one hand, you’re cycling some of the macro headwinds from last year. However, it feels like the government has really stepped up the anti extravaganza campaign.

And maybe talk us through how you’re thinking about that into the second half of the year. So the first question on China. Second question on Brazil. I think one of your peers confirmed they had taken a price increase in July. Have you noticed an improvement in your market share trends as you’ve gone into Q3 on the back of that?

Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Hey, Sanjit. Good morning. Michelle here again. So, two points on the question there. First, China, I think that is not new on our conversations that the industry had a big slowdown.

And as we look at quarter one, quarter two this year, as anticipated, comps not easy for the industry, and the industry continue to perform is likely negative. So that was the picture on first quarter of the year, remained the picture on the second quarter. Of course, the size of the underperformance now is much smaller relative to what we saw last year. And we continue to think that as we move through the quarters, we will see this impact reducing, the comps becoming more in favor of the industry, and at one point, this industry should start fire on the right direction, but not that yet on quarter two. The old trade channel, which is an important component of that, is stubbornly continues to be very weak.

So the own trade is not rebounding. The growth that we’ve seen in the industry is more in the off premise. So a big portion of our plans in China now are improving the route to market, improving the propositions that we have for the off premise. The good part is that we under index in sharing the off premise. So there is a lot of space for us to capture and to grow, but it demands adjustments on the execution.

I can’t tell a lot about any new measures from the government on their own trade, because it’s new. I was in China a couple of weeks ago, and I heard a lot about that. And you could see that there was less traffic in the own trade, especially Chinese restaurants. But I think that we need some more time to see where these will land. While on the other hand, we all see growth on the off premise.

The off premise looks to be already beyond the declining of the industry, already turned into growth. And it’s a big opportunity for us, given the fact that we under indexed there. Second, Brazil, I think that we commented a little bit on press release, and during the call now. But in Brazil, industry was soft in quarter two. So the same weather conditions that we saw in The US, in Mexico, they extended throughout The Americas, to be honest, Argentina, but because the nature, the size of Brazil, that’s a tropical country.

So you had tough winters in the South, but mild weather in the Southeast, when the weather is too bad across the whole country, then this has a big impact. That was the main adverse impact that we saw in the industry in Brazil on the quarter two. But we also have our revenue management calendar. We discussed this the second half of last year, hedge that we have, transactional effects have a component of cost that are big for Brazil this year, and the revenue management had to follow our plans. So we had prices as we have every year in our calendar.

Relativity in terms of price was rather tough during the first half of the year for Brazil TIM. And we see the market somehow adjusting throughout the year, prices are moving and we expect to have better relativity as we move forward. But of course, we only control our own agenda, our own revenue management. So, we are monitoring, executing, preparing the business for a good second half of the year.

Sanjeev Ajla, Analyst, UBS: Thank you.

Conference Operator, AB InBev: Thank you. Our next questions come from the line of Andrea Pistacchi with Bank of America. Please proceed with your questions.

Andrea Pistacchi, Analyst, Bank of America: Yes. Thank you. Hi, Michel and Fernando. Two questions, please. The first one on The U.

S. You had a very solid performance, particularly on profit in The U. S, but the industry the rate of decline of the industry in the last couple of months seems to have got a bit worse. Clearly weather impact, pressure on the low income consumer, which we know. But should the industry continue to decline at a greater pace than it has been historically, that historic 1%, 2%, do you think you have enough levers to continue to at least hold profit flat or maybe grow it a bit in The US?

And what are these levers? And then the follow-up will be, I think, for Fernando. So I wanted to ask about share buybacks. You completed the $2,000,000,000 finished that in June. Free cash flow in H1 was very solid.

Yes, most of the cash is generated in H2, but H1 very solid. The end currencies relatively stable. So what held you back from increasing the buyback already at this point? I know the past couple of years you announced a buyback in October, but particularly given the attractive level of the share price, why not increase the buyback earlier? Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Andrea and Michel, I’ll take the first one here and hand it over to Fernando to follow-up on your second question. Okay. So I think that The U. S. Industry and our own performance, discussed it a little bit on the question before from Robert.

But we see this good momentum on our portfolio, good brands for us leading this. So Michelob Ultra is a premium brand on our portfolio. So it’s one of the levers for us, not only to continue to grow share, but to improve our financials. Busch light and innovation continue to fire, and this is very positive. When you look into the industry, you are right, like remain below the long term trend.

And as you mentioned, we mentioned this before as well. So, very strange weather with many, many different events over the first half of the year impacting the industry. So, mathematically, see this in the states where these events and the weather was worse versus the other states. So a big portion of what makes the difference between historical trends and what we see today. The second topic pockets of consumer constraint, as we said, baskets pretty much stable in consumption, but because of the food inflation, of course, quantities are impacted.

The share of alcohol beer on this basket remains stable. Therefore, as economy continues to progress, as purchase power rebuilds for these consumers, one can only expect normalization. And we keep working hard on productivity, as we always do. So we are managing costs, improving productivity. Those are very important levers together with mix and the growth of the Beyond Beer to continue to use for us the top and the bottom line that we have seen on this quarter two.

But let me take your question, and use a little bit of the call that we have now the material, just to give you one example, which I think that could be very useful for everybody, that’s why I brought, which is Europe. So you don’t take a market that’s more developed than Europe in the beer industry. You don’t take a more diverse and dynamic economic environment than we see across Europe. And we talked a lot last year, was a little bit of the reverse of this Americas weather that we are seeing, how complicated the weather was last year in Europe. So this year we are having a very good summer, sunny, a little bit dry than average.

We monitor consumer purchase power, which has been restoring in Europe to what was before 2021. And the industry is in growth in dollars, pretty much stable in volume. And now our portfolio is outperforming the industry. So you get all the components that we discuss in every call, about all the trends and headwinds to the industry, good weather, consumers in good shape, and then the industry is growing dollars, euros in this case in Europe, and our portfolio is performing. So I think that the long term trends of the industry will not change.

What we need to cycle is this more dynamic environment, and getting to see consumers in a better place, So, the industry will continue to grow as EuroMonitor, IWSR forecasts for the years to come. So, quarter will be different, but the long term trends,

Fernando Tenenbaum, Chief Financial Officer, AB InBev: I don’t think that are too different. And Andrea, Fernando here. So, on your question, what I can tell you is that our capital location plans aren’t changed. We are always very disciplined how we use our cash, but what is fair to say, and you made this point, is that with the increased cash generation, and the lower leverage, we have increased flexibility in our capital allocation choices. The main goal of our capital allocation policy, we stated several times, is creating value for our shareholders.

And as you said, well, cash flow is weighted towards the second half of the year, although first quarter was strong, was half a billion dollars better than the previous year. So we have, of course, nothing to announce at this time, but if there is one key takeaway, is that plans are unchanged, and we have increased flexibility as we continue to progress on our stronger balance sheet, and very good cash flow generation.

Andrea Pistacchi, Analyst, Bank of America: Okay. Clear. Thank you.

Conference Operator, AB InBev: Thank you. Our next questions come from the line of Edward Mundy with Jefferies. Please proceed with your questions.

Edward Mundy, Analyst, Jefferies: Good morning, Michel, Fernando. So my first question is coming back to the concept of volume growth, where you’re growing probably below your potential. I think historically, of the developed markets have probably held you back a little bit, but you’re sounding much more assured on Europe. And we’ve seen outperformance for a couple of quarters now in The U. S.

Does this give you more reassurance in your ability to grow group volumes over the medium term as you get through some of these short term issues in Brazil and China? And then second question is on your plans to activate the category. I think Slide 31 shows some of the sports properties against which you activate. Thinking about FIFA twenty twenty six and probably some of your learnings from the FIFA Club World Cup this year, I think relative to three or four years ago, it’s fair to say that you’re getting sharp on marketing. Do you see this as bigger opportunity for the business and the category as you look out to next year?

Michel DeKarris, Chief Executive Officer, AB InBev: Good morning, Ed. Good afternoon. Thank you for the question. So, twofold. I talked a little bit about this before.

That is the gift of our global footprint, and then the idiosyncratic issues that we face in challenging environments in some countries time to time. And we keep the focus on the things that we can control. So you look at our EBITDA growth, EBIT growth with leverage, and then EPS, while we manage the specific conditions on volumes here and there. The long term perspective is that we continue to focus on this optimized portfolio. We continue to focus on that advantage of our footprint for the long term, the growth that the developing and emerging countries can add to the category.

And we are very pleased to see this quarter that our developed markets, you can cut from Canada, US, Europe, the share gains in South Korea, they are all building on our full potential. So, we will continue to see specific events in each and every market, differences in the quarters, but we continue to believe that the long term category opportunity in our business, because of our footprint, remains in place for us to deliver growth in the long term. 2026, this question is an interesting one. So FIFA and the event in itself is always a great opportunity for the category. So, our models show that in the years that we have the World Cup, there is a bump in volume, both in the month of the World Cup, as well as for the whole year, given the magnitude of the event.

Curious to see what’s going to happen next year is a larger event, so there will be more countries, more excitement, more weeks on there, and this will, course, be part of the build up for the category for our business next year. In our case, the location, meaning US, and the fact that this will span across The Americas, could not be better, is where most of our footprint sits. So it’s going to be very welcome to see the time of the games, the participation of the countries from their continents, and what’s going to happen here. And if you take the momentum that we built with Michelob Ultra this year as a sponsor of the FIFA Clubs World Cup, There is a lot of excitement building for next year. And just as a reminder, in between now and there, we also have Winter Olympics that will be very interesting because it’s going to cut from the back end of this year into the first quarter of next year.

And we have now more experience, more knowledge on how to activate the Olympics. So we’ll continue to invest on these mega platforms. They have very good ROI for us and very helpful for the momentum of our brands.

Unidentified Speaker: Great. Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Thank you.

Conference Operator, AB InBev: You. Our next questions come from the line of Laurence White with Barclays. Please proceed with your questions.

Unidentified Speaker: Good morning, Michel. Good morning, Fernando. Thanks very much for the questions. A couple of me a couple from me, if that’s okay. Firstly, on your U.

S. Business, you hopefully showed the slide showing the very strong brands you have across the world and included in Bud and Bud Light. I think over the recent years, those brands have struggled, as you pointed out, that mainstream beers have been outperformed by some of the premium brands and imports. But of course, recently, you’ve shown the success with Busch Light, which sort of holds a similar category. Do you think there’s any opportunity to reinvigorate those two brands?

Or do you think there’s simply the potential for other brands to take your marketing spend and make better use of it with better returns? And then secondly, on Europe, you’ve highlighted almost the perfect conditions across that market, excellent weather. You’ve taken share in a number of five out of six of your markets. But of course, volume growth, you said, was flat. Sort of going back to a couple of the earlier questions, are you surprised by that?

Do you think there’s better opportunity to grow volumes in Europe? Or is it just going be a very difficult market to be able to get volume growth in future? Thank you very much.

Michel DeKarris, Chief Executive Officer, AB InBev: Thank you, Lawrence. So, you asked on the portfolio again, the key for us is to continue to rebalance this portfolio and making sure that the offers we have are aligned with the main consumer trends. So, Michelob Ultra, very well positioned there, gaining both scale and momentum, and it’s a brand that is just sitting on a very important place with many opportunities to continue to grow. Like, just to give you couple of numbers there for you to reflect upon. So, Michelob Ultra is growing this year in all 50 states in The US.

All 50 states. I don’t think that there is many brands in the industry, or outside the industry, that are having growth across all states. When you think of the brand, in some states, the brand is as big as 11% share. If you take the entire West Coast, or the Northeast Of The U. The brand is only 6% share.

So it’s half the size in the Northeast and West Coast, that it is in the leading states for the brand in The U. S. So there is much more that we can invest and continue to expand Ultra there. The case is similar to Busch Light. So in the Busch Light strongholds, the brand is very big.

So the brand is the leading brand in the mainstream, and has shared above 10% in some of these strongholds. It’s the second fastest growing brand now in The US, but the distribution is still very limited. So the brand can continue to find growth areas across most of The U. S, because it’s very concentrated in the inland, and is now expanding south, west, north, and Northeast from there. So we continue to increase.

And same statistic for Busch Light, leading states, 11% share of the industry. In the rest of The US, as I was mentioning, is less than 3%. So a lot of headroom there. And when you think about Bud Light, Budweiser, the other brands, the answer for a question is yes, but we have choices, priorities, and work to be done across all these brands. We are more advanced with Fulcher, more advanced with Busch Light, while we continue to work on the other brands and make of course, the right choices in terms of allocation of capital and investments for these brands.

Think about Europe, the question is also very interesting. So conditions were good. Industry was flat, growing in dollars. We know that the underlying trend of the industry in the last few years was not that. So, there is an improvement that we can see under the good conditions.

And because industry is a much bigger thing, of course, the improvements are never overnight, but it’s good to see the industry, but also the share of throat. So, part of the trip that I had in Europe, I went to countries like Italy, France, and beer is gaining share of throat on these countries. You see beer growing a lot in new occasions in Italy, for example, led by less. You see the positioning of our brands, plus the portfolio that we have in France, working very well from south to north of France, different occasions, different brands, but all of them increasing penetration, and gaining more occasions in the country. So, markets move, consumers move, the innovation that we have, the portfolio that we have is working for consumers across the continent.

And I think that we continue to see under the right conditions this industry to progress in Europe, but also as we see in other markets. Thank you.

Unidentified Speaker: Appreciate it.

Conference Operator, AB InBev: Thank you. Our final questions will come from the line of Chris Pitcher with Rothschild and Company. Please proceed with your questions.

Michel DeKarris, Chief Executive Officer, AB InBev0: Thank you very much, Michel Fernando. Just a couple of quick questions. Just following up on the China question. There’s a lot talk about it being cyclical shift by category, but do you

Sanjeev Ajla, Analyst, UBS: think given how long it’s been going

Michel DeKarris, Chief Executive Officer, AB InBev0: on now that there may be a more fundamental change in the way beer is being consumed and have you had to re weight your sales force to target that off trade opportunity or do you still generally believe the economy comes back, people go back to nightclubs, it’ll return to normal? And then secondly, it looks like you’re sort of stabilizing and growing share in India, which is encouraging. How much are you investing in that market for the next sort of ten, twenty year story? Thanks.

Michel DeKarris, Chief Executive Officer, AB InBev: Hi, Chris. Thank you. So on China, as we said before, and addressing in a very straight way your question, I think is both. So, we need to continue to protect the strength that we have on the own trade, the share that we have, and look for the bounce back of the channel, while with no doubts rewiring the whole business, not only the sales force for the off premises key. And what I mean by that, the SKUs that we sell in the on trade are different from the SKUs that we sell on the off trade.

And we need to improve our portfolio assortment. We are doing that and our offers, and our distribution in the off premise. The execution of the off premise is very different than the execution of their own trade. We need to have the right people, the right supply chain, the right wholesalers, the right merchandising. So, the brands can harvest the high equity that we have on average consumers by being present and executed in the right channels.

And of course, because our business was over skilled in the East, in the entree channel, making these adjustments in China takes time. But we are working very hard on that. The team that is pretty focused on rebalancing our presence on these channels and building the distribution. As I said before, the exciting part of that is that we under index by a lot in the off premise. So, the headroom for growth is very good.

We did just need to realize that. Then sorry.

Michel DeKarris, Chief Executive Officer, AB InBev0: Sorry, just to clarify, because the margin’s holding up in China quite well despite the volume declines. That’s happening at the same time as you’re doing this investment. It’s not being delayed. That’s quite encouraging. Thank you.

Michel DeKarris, Chief Executive Officer, AB InBev: Yes. And the premium products are premium, regardless of the channel. We sell more premium products, and we have a very efficient business in China. So we have space to invest as we are investing now, and we will continue to invest. And in India, the story of India is a story of like vitality in the growth of the industry, because

Fernando Tenenbaum, Chief Financial Officer, AB InBev: the industry is

Michel DeKarris, Chief Executive Officer, AB InBev: really growing, but it’s also a little bit of volatility. Right? So, our business is a national business, but it’s not the same across all states. The states have their own rules, the idiosyncratic issues that you deal with time to time. But what is really important for us there is the size of our premium business.

So we lead in premium and super premium with a very high share. We broke into double digit share now with Budweiser as a brand in India overall. And of course, in the premium, the share is very high. The growth there is good. We keep improving our business from systems, footprint, brand equity and capabilities.

And this is a market that has for sure a very long term growth prospect, because the beer industry is still very underdeveloped. And as more states improve flexibility in distribution, adjust the structure of the marketing taxes and access, we will continue to have many opportunities to grow in India. So we are pleased so far with the quarter two and the momentum we have there. But that’s a story that’s just at the beginning. So there is much more to come.

Thank you.

Conference Operator, AB InBev: Thank you. This was the final If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michel DeCarris for closing remarks.

Michel DeKarris, Chief Executive Officer, AB InBev: Thank you. And thank you all for your time today and for your ongoing partnership and support of the business. So tomorrow, Friday, International Beer Day. So I hope that you have the time to grab friends, drink some beer, and celebrate. So cheers.

Thank you and stay well.

Conference Operator, AB InBev: Thank you. This does conclude today’s earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.

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