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Anheuser-Busch InBev SA/NV Earnings - Analysis & Highlights for Q4 2024
Overview
PositivesNegativesOutlook
- The board has proposed a full-year dividend of €1 per share, a 22% increase YoY.
- The company's volumes grew slightly, outperforming the industry in five of its six key markets, led by Corona and Stella Artois.
- The company's momentum continued in South Africa with volumes growing by mid-single digits, gaining share of both beer and Beyond Beer.
- The company is investing in its brands to fuel growth as its portfolio is reaching an inflection point.
- The company saw a sequential improvement in the US industry, but the summer was bad weather.
- The company faced a migration issue in some ZIP codes where the performance is slightly negative to the average.
- The company sees geographically the eastern part of China having more difficult than the western part of China and Central China.
- The company is putting more weight in less brands and getting more pressure on the system, execution, and what they are doing.
- The company faced a soft consumer environment in China, which impacted the overall beer industry and particularly the on-premise channel.
- The company expects another organic growth on top of what it had.
- The premium beer segment is forecast to grow volumes across all geographic clusters and at more than double the rate of the category overall.
- The company expects to drive long-term growth with its CapEx outlook.
- The company expects to account for 34% of the category volume growth over the next five years.
- The company expects to have a healthy growth for its business.
Q&A Highlights from Anheuser-Busch InBev SA/NV Earnings Call Q4 2024
- Analyst asked about the company's capital allocation policy and the need for major acquisitions.
- The company's capital allocation policy remains disciplined, prioritizing organic growth investments and using excess cash to maximize value creation. The company has a strong balance sheet and has reduced its net debt by $6.9 billion in 2024 while announcing a share buyback of $2 billion and increasing dividends by 22%. The company has increased flexibility in its capital allocation choices to continue investing for growth and return capital to shareholders.
- The company's capital allocation policy remains disciplined, prioritizing organic growth investments and using excess cash to maximize value creation. The company has a strong balance sheet and has reduced its net debt by $6.9 billion in 2024 while announcing a share buyback of $2 billion and increasing dividends by 22%. The company has increased flexibility in its capital allocation choices to continue investing for growth and return capital to shareholders.
- Analyst asked about the margin delivery in the US, specifically the expansion in Q4 compared to the prior couple of quarters.
- The company is seeing momentum in the US, with its portfolio healthier and accelerating, reaching an inflection point due to the success of its number one and number two share volume brands, Michelob ULTRA and Busch Light. Margins are recovering, and the company is investing to continue to accelerate the portfolio. The company continues to work on productivity and generate efficiencies in the business, but its priority is to invest to make sure the portfolio continues to accelerate.
- The company is seeing momentum in the US, with its portfolio healthier and accelerating, reaching an inflection point due to the success of its number one and number two share volume brands, Michelob ULTRA and Busch Light. Margins are recovering, and the company is investing to continue to accelerate the portfolio. The company continues to work on productivity and generate efficiencies in the business, but its priority is to invest to make sure the portfolio continues to accelerate.
- Analyst asked about the company's raw material outlook and COGS.
- The company's focus is on effectiveness rather than ratios. They have streamlined their portfolio and elevated their game in data, which has allowed them to drive dollars more effectively. They have also invested in technology and capacity to optimize their capital allocation.
- The company's focus is on effectiveness rather than ratios. They have streamlined their portfolio and elevated their game in data, which has allowed them to drive dollars more effectively. They have also invested in technology and capacity to optimize their capital allocation.
- Analyst asked about CapEx efficiencies and maintenance CapEx for the business.
- The company is implementing a disciplined capital allocation strategy and is optimizing their CapEx projects. They are deploying AI and improving their ability to code with less man hours to deliver products. They are also using their scale and ZBB approach to design better, procure better, and build in a more efficient way. The company has invested in additional brewing, packaging, and distribution capacity in multiple countries, but they are still committed to investing in their business while maintaining a healthy growth.
- The company is implementing a disciplined capital allocation strategy and is optimizing their CapEx projects. They are deploying AI and improving their ability to code with less man hours to deliver products. They are also using their scale and ZBB approach to design better, procure better, and build in a more efficient way. The company has invested in additional brewing, packaging, and distribution capacity in multiple countries, but they are still committed to investing in their business while maintaining a healthy growth.
- Analyst asked about the company's strategy for China.
- The company is focused on premiumization, increasing availability, and leveraging their road-to-market in China, but they need to give more time to see how the year will unfold. They are putting more resources on less brands and making the execution behind these brands more comprehensive. They had a good Chinese New Year and saw sales to retailers moving in line with last year, but sales to consumers look better than last year. They need to see how things develop in the year and will update later in the second and third quarters.
- The company is focused on premiumization, increasing availability, and leveraging their road-to-market in China, but they need to give more time to see how the year will unfold. They are putting more resources on less brands and making the execution behind these brands more comprehensive. They had a good Chinese New Year and saw sales to retailers moving in line with last year, but sales to consumers look better than last year. They need to see how things develop in the year and will update later in the second and third quarters.
- Analyst asked about the cultural change that the company is leading and how it is impacting the marketing decisions.
- Michel Doukeris, the CEO, explained that the cultural change is focused on shifting from an inorganic growth-led company to an organic growth-led company, which involves a more localized approach to marketing. The company has introduced the concept of megabrands, which are the five most relevant brands in each market, and is using data and digital products to create a one ABI way of marketing that can be used across all markets. The company is also leveraging its scale with mega platforms, such as sports events and music, to support its brands. The goal is to create a simpler approach for a global company that can be used in all markets while continuing to be laser-focused on local consumers.
- Michel Doukeris, the CEO, explained that the cultural change is focused on shifting from an inorganic growth-led company to an organic growth-led company, which involves a more localized approach to marketing. The company has introduced the concept of megabrands, which are the five most relevant brands in each market, and is using data and digital products to create a one ABI way of marketing that can be used across all markets. The company is also leveraging its scale with mega platforms, such as sports events and music, to support its brands. The goal is to create a simpler approach for a global company that can be used in all markets while continuing to be laser-focused on local consumers.
- Analyst asked about the guidance for CapEx and working capital for 2025.
- Michel Doukeris, the CEO, explained that the guidance for CapEx and working capital is still being finalized, and it is too early to provide specifics. However, the company is encouraged by the momentum it has and sees the 4% to 8% range as a solid outlook for the year of 2025. Fernando Mommensohn Tennenbaum, the CFO, provided more details on the company's improvement in cash flow in 2023 and 2024, which was driven by an increase in EBIT, a reduction in net interest, and a more efficient CapEx spend. He also mentioned that the company is in a good position to continue to generate strong cash flows going forward.
- Michel Doukeris, the CEO, explained that the guidance for CapEx and working capital is still being finalized, and it is too early to provide specifics. However, the company is encouraged by the momentum it has and sees the 4% to 8% range as a solid outlook for the year of 2025. Fernando Mommensohn Tennenbaum, the CFO, provided more details on the company's improvement in cash flow in 2023 and 2024, which was driven by an increase in EBIT, a reduction in net interest, and a more efficient CapEx spend. He also mentioned that the company is in a good position to continue to generate strong cash flows going forward.