Anheuser-Busch InBev (AB InBev) CMD 2026

Hello everyone. Thanks for joining our capital markets day here in St. Louis. It is a great pleasure to welcome you all here in person, and thanks to those taking the time to join remotely across the various time zones. We always learn from talking with you at these events, and we really appreciate the time. Sean, where are you, Sean? Sean has given me the tough task of being the final speaker on day 2, after lunch, two early morning spinning classes, and a market visit. Once again, appreciate the vote of confidence, Sean. Thanks. The presentation yesterday, we brought to life the first two pillars of our strategy, so lead and grow the category, and digitize and monetize our ecosystem. Then we had the brewery tour and the brand immersion dinner last night, along with today's market visit.

I believe that gave you an opportunity to see this strategy in action. Now, I will take you through the third pillar of our strategy, which is optimize our business. This session, it brings together how we translate our strategy to financial performance and long-term financial returns and long-term shareholder returns. Let's get started. Quick introduction. I'm Fernando Tennenbaum. I'm AB InBev's Chief Financial Officer. I've been with the company for more than 22 years across different financial functions, including investor relations, treasury, M&A, and just prior to my current role, I was the CFO of our publicly listed subsidiary, Ambev. The goal of optimizing our business is simple. We want to maximize shareholder value over time. Every investment, every operating decision, and capital allocation choice, we need to evaluate that through that lens. When we look at our value creation model, we focus on four areas.

The first one is consistent compounding growth. We talked a lot about it yesterday, but consistent compounding growth. The second one is disciplined resource allocation. The third area is strong free cash flow generation. The fourth, with this free cash flow, dynamic capital allocation decisions. I like to say that each one of these supports the other, working together to drive shareholder value. Let's start with the first one, consistent compounding growth. When you see this slide now, you might be wondering why the first slide in the finance guy's presentation is about sales and market investment. But in reality, strong culturally relevant brands are the foundation for driving consistent compounding growth. Strong brands, they increase consumer loyalty, they earn a premium price, they enhance profitability, which enables us to invest more to continue to increase the power of our portfolio.

As you can see on the chart, we have consistently invested in our brands, mega platforms, and capabilities. Since 2021, we've put more than $7 billion on average a year into sales and marketing. Yesterday, Marcel showed the impact of this investment. Our capabilities have evolved, enabling us to better serve our customers, attract new consumers, and lead and grow the category. In our industry, scale matters. It improves efficiency, profitability, and importantly, increases our capacity to invest. Over the last few years, you have seen us partner with global mega platforms such as the Olympics, FIFA, Netflix, Live Nation, and beginning in 2027, the UEFA Champions League. All of these partnerships, they are enabled by our scale, footprint, and brands. Importantly, this investment, it has also been driving consistent financial results.

While the operating environment has remained dynamic over the last five years, our top-line performance has been reliable. Revenue has compounded in the mid-single digits over the whole period. It was supported by contributions from volume, revenue management, and positive mix. If you move down the P&L, let's take a look at margins. Our margins are best in class across our CPG peer group, reflecting the fundamental strengths of our business. It is our brands, scale, leadership positions, efficient operating model, and ownership culture. Strong margins enables us to efficiently convert each dollar of revenue growth into earnings. At our last Capital Markets Day in Mexico City, we showed how commodity cost increases and transactional effects headwinds put pressure on margins from 2021 to 2023.

Over this period, we chose to absorb cost increases on behalf of consumers, maintaining our disciplined pricing approach while continuing to invest in the business. At that time, we said there was no structural reason our margins could not expand over time. Indeed, over the last couple of years, we've seen some progress in this direction. Since 2023, input costs have increased mostly in line with inflation on average, and this more normalized environment has given us the opportunity to improve margins. By maintaining disciplined revenue management, unlocking production cost efficiencies, and tightly managing overhead costs from 2023 to 2025, we expanded gross margins by 200 basis points and EBITDA margin by 220 basis points. The key point is that we have expanded margins while we continue to invest behind our brands and capabilities to drive top-line growth. We are encouraged with the margin progression so far.

While each year will be different, we believe we can continue to trend in the right direction over time. Moving to bottom line performance. Our top-line growth and margin improvement, it have delivered reliable compounding EBITDA growth. Every year has had its own dynamics, but the resilience of our strategy and the diversification of our footprint have enabled us to deliver within or above our medium-term outlook in every year since 2021, putting us in the top quartile of our CPG peers on a CAGR basis. The next step is converting this EBITDA growth into dollar EPS. Since 2021, we have grown underlying EPS at an 8.3% CAGR. Once again, it is putting us in the top quartile of our CPG peers. By improving cost efficiency and optimizing across the P&L, we have been able to deliver consistent EPS performance.

Now, let's move on to our second focus area, which is disciplined resource allocation. The scale of our business, it gives us significant capacity to invest. That makes disciplined resource allocation even more important. Every dollar must compete for capital and be directed toward the opportunities with the strongest mix of strategic impact, growth, and financial return. Yesterday, David presented Watchtower, showing how we use technology to help make the optimal decision for our commercial investments. For CapEx, we follow a project-by-project evaluation process that enables us to assess the trade-offs, make better investment decisions, and invest in opportunities that offer the best mix of growth and financial return. Having said all that, frameworks are easy to put on a slide. Very easy. What really matters is how we execute. It is the process, it is the quality of our decisions, our willingness to make the right trade-offs.

This is what delivers values. Our resource allocation capability has been one of the drivers of the improved CapEx efficiency across the business over the last few years. With technology, increased best practice sharing among our zones, and applying a ZBB mindset, we have reduced net CapEx from $5.5 billion in 2021 to $3.6 billion in 2025. Importantly, this increased efficiency did not come at the expense of growth. As our top and bottom line performance show, we have continued to invest in the initiatives that support long-term growth. Nearly half of our CapEx has gone towards growth projects, with the balance supporting our existing business. Let's take a look at some concrete examples. We have invested into new facilities, including a $400 million brewery in Colombia. We have expanded our Beyond Beer, no alcohol beer, and premium beer production capabilities globally.

You saw an example of this during yesterday's tour with the Beyond Beer packaging here in the St. Louis brewery. As you heard yesterday, we have invested into new partnerships with global mega platforms such as the Olympic and Netflix, and we extended our partnership with FIFA. In addition to capabilities and capacity, we continue to invest to strengthen the resilience and efficiency of our supply chain. We remain focused on improving operational efficiency in three key areas that are essential to our business, agriculture, water, and energy and emissions. In water, we have challenged ourselves to go further on water use. We are aiming to achieve an average efficient ratio of two hectoliters per hectoliter across our breweries globally by 2030. Water stewardship is at the core of building resilience in our business. If there is no water, there is no beer.

Return on invested capital is a key measure of how growth, efficiency, and disciplined resource allocation are improving the value creation potential of our business. Our main focus here is increasing total ROIC, which measures return across the full invested capital base. Since 2021, it has increased by 120 basis points, driven by higher profit and greater capital efficiency. While total ROIC is the key KPI for us, given the change in our strategy to organic growth, ROIC excluding goodwill is a useful additional measure of our return potential going forward. It shows the returns generated by the operating capital deployed in the business, and it makes it easier to compare us with peers. We see a clear path to further improve ROIC through continued profit growth and greater efficiency across the invested capital base.

That will bring us to the third pillar of our value creation model: strong free cash flow generation. In the end, everything we do to optimize the business across the P&L and balance sheet is reflected in free cash flow. We often say inside the company, and I think I said a few times yesterday, "Cash is king." Free cash flow is the clearest measure of whether our growth, efficiency, and capital discipline are translating to real financial returns. At our full year 2024 results, we spoke about the step change in our free cash flow from $9 billion to $11 billion. We also noted that we expected to grow from this base going forward.