Anheuser-Busch INBEV SA/NV 2026 Q3 Earnings Call

Welcome everyone to our third quarter 2026 earnings call. 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. After that, we will be happy to answer your questions. Let's start with the key highlights. The momentum of our business continued in the third quarter. Consistent execution of our strategy enabled us to deliver solid top and bottom line performance, while investing in our brands and capabilities to fuel future growth. Volumes grew for a third consecutive quarter, with market share growth globally and record high third quarter volumes in 15 markets, including Colombia, Peru, Ecuador, South Africa, India, and Dominican Republic, amongst others. Revenue increased by 4.9% with solid revenue per hectoliter growth of 4.2%. Underlying EPS increased by 22% to reach $1.21.

We stepped up sales and marketing investments to activate key mega platforms this quarter, strengthening our brand power and supporting increased participation with our portfolio. Our performance was driven by our replicable growth drivers. We have continued momentum across our mega brands, non-alcohol beer and Beyond Beer. This marketplace continued to scale, with GMV increasing by 45% to reach $1.4 billion. Given our strong balance sheet and increased capital allocation flexibility, the board has approved an interim dividend of EUR 0.40 per share. Turning to our operating performance. Total volumes grew by 0.4% in the third quarter, led by growth in our soft drinks business. Beer volumes were flattish as growth in two-thirds of our markets was offset by a challenging industry in China. Our best-in-class revenue management capabilities, combined with positive mix contribution from our mega brands, delivered a revenue per hectoliter increase of 4.2%.

EBITDA increased by 3.9% with flattish margins, as higher sales and market investments and commodity headwinds were partially offset by disciplined revenue and cost management. U.S. dollar EBITDA increases by 6.5% in the third quarter and by 10% year to date. EBIT increased by 6% and underlying EPS grew by 22% as we continued to optimize the business and drove operating leverage through the P&L. Our geographic footprint and global scale continue to enable us to deliver consistent results across different operating environments. Our footprint is both well-diversified and balanced. With around 70% of our EBITDA generated in emerging and developing markets, we are well positioned to capture future industry growth with a mix of currencies. Now, let's review our key regional highlights, starting with North America. In the U.S., our portfolio momentum continued with share gains in both beer and Beyond Beer.

We have gained share of total alcohol for 10 consecutive quarters and are the number one share gainer year to date. Our beer performance was led by Michelob ULTRA and Busch Light, which were the top two volume share gainers in the industry. Our Beyond Beer portfolio continued to expand our total addressable market and delivered revenue growth in the low teens, led by Cutwater and NÜTRL. Now, let's turn to Middle Americas. In Mexico, market share gain and margin expansion drove mid-single digit volume growth and double-digit bottom line growth. We grew revenue in mainstream, premium, non-alcohol beer and Beyond Beer and continued to increase our portfolio brand power. In Colombia, record high third quarter volumes drove double-digit top and bottom line growth. Volume and revenue grew across all price segments, with our portfolio gaining share of alcohol beverage.

In Brazil, market share momentum and volume growth drove a mid-single digit top and bottom line increase. Our premium and super premium beer portfolio led our performance and delivered high teens volume growth, and strengthening our leadership position in the segment. In Europe, market share gains and premiumization drove continued top line growth. Volumes were flat, estimated to have gained or maintained share in a majority of our key markets, with our performance driven by our mega brands and non-alcohol beer. In South Africa, record high volumes and premiumization drove high single digit top line growth. Our premium beer portfolio led our performance, delivering mid-thirds volume growth. Now, moving to APAC. In China, revenue and volumes declined by 16.8% as we underperformed a challenging industry. We estimate the industry declined by low teens in our footprint, impacted by abnormal weather and continued weakness in the on-premise channel.

While our overall results remained below potential, we made progress in areas of strategic focus. We continued to invest in our mega brands, innovations, and strengthen our portfolio brand power. Our in-home channel market share trend improved versus last year, supported by continued momentum in our core plus and super premium brands, and growth in the O2O channel. There is more work to do, and we are investing to improve our execution and rebalance our portfolio towards growing segments, channels, and geographies. Let's now turn to our strategic pillars, starting with lead and grow the category. Our mega brands continue to drive profitable growth across our markets, with net revenue increasing by 7.7% during the quarter. Corona continued to drive premiumization, growing revenue by 20% outside of Mexico, and growing volumes by double digits in 37 markets.

The combination of our mega brands and platforms is a powerful opportunity to connect with consumers through key moments of culture and celebration. Following successful activations in the first nine months of the year, we have a strong lineup for Q4 and into 2027. These mega platforms, including our partnerships with Live Nation and Netflix, are placing beer and our brands at the center of culturally relevant moments for consumers. Our strategic investments strengthened the connection with consumers and supported a continued increase in our portfolio brand power. Consistent execution of our category expansion levers drove increased consumer participation with our portfolio this quarter, with growth across our core, premium, balanced choices, and Beyond Beer brands. In non-alcohol beer, our portfolio outperformed the industry and delivered a 35% revenue increase led by Corona Zero and Michelob ULTRA Zero.

With an estimated 60% of the volume coming from new occasions and new consumers, no alcohol beer is an opportunity to develop the category and drive incremental volume growth. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the third quarter, BEES captured $15.9 billion in gross merchandising value, a 12% increase versus last year. This marketplace continued to scale, with GMV from third-party products increasing by 45% versus last year to reach $1.4 billion. Our digital D2C business is growing and enabling us to further monetize our ecosystem. Our digital platforms served 13 million consumers and generated $158 million in revenue. We are also commercializing third-party products on our D2C platforms and now have a growing marketplace with annualized GMV of $200 million.

With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. I will take a few minutes to discuss the progress we have made on three areas in optimizing our business: superior profitability, compounding EPS growth, and increased capital allocation flexibility. Let's start with superior profitability. Our margins are best in class, reflecting the fundamental strengths of our business: our brands, scale, leadership positions, efficient operating model, and ownership culture. Disciplined revenue and cost management enable us to offset commodity cost headwinds and maintain our margins while we are stepping up investment in key mega platforms this year. Over the last 12 months, we have invested $8.1 billion in sales and marketing to support our growth priorities as we move into the next phase of our strategy. While each year has unique dynamics, we are confident we have opportunities for further margin expansion over time. Moving on to EPS. Top-line growth, effective cost management, and the continued optimization of our business drove constant currency EPS growth of 13.9%.

With translational effect tailwinds, dollar EPS increased by 22.4% to reach $1.21 per share. We have a strong balance sheet. Given the proactive management of our bond portfolio, our last 12 months free cash flow is greater than any of our annual bond maturities, putting us in a position where we have no relevant refinancing needs. 98% of our debt is fixed rate with an average coupon of around 4%, and there are no financial covenants on our bonds. Given the strength of our balance sheets and free cash flow generation, we have increased flexibility on our capital allocation choices. The objective for capital allocation framework is to maximize value creation for our shareholders.

Consistent with our ambition for a progressive dividend over time, we have announced an interim dividend of 40 euro cents per share, compared to an interim dividend of 15 euro cents per share last year. We also continue to execute on the 24-month, $6 billion share buyback program announced last year. To date, we have repurchased $2.6 billion of shares. Looking ahead, the strength of our ownership culture and execution, together with our best-in-class brands and solid year-to-date results, reinforce our confidence in our ability to deliver our 2026 outlook. With that, I will hand it back to Michel for some final comments.

Thanks, Fernando. Before opening for Q&A, let me recap on our performance this quarter and the opportunities we have ahead of us. Our continued momentum reflects the resilience of our strategy and our ability to deliver reliable compounding growth across different operating environments. We continue to invest to strengthen our capabilities and brand power to lead and grow the category. Revenue grew by 4.9% with continued volume growth and a revenue per hectoliter increase of 4.2%. Underlying EPS momentum continued, increasing by 22% in both the third quarter and year to date. With our strong balance sheet and increased capital allocation flexibility, we announced an interim dividend of 40 euro cents per share. As we progress through the next phase of our strategy, we are well-positioned to deliver superior value creation. With that, I will hand it back to the operator for the Q&A.