Anheuser-Busch InBev's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Anheuser-Busch InBev ( BUD)

Q4 2011 Earnings Conference Call

March 08, 2012 8:00 AM ET


Graham Staley – Global VP, Investor Relations

Carlos Brito – CEO

Felipe Dutra – CFO


Andrea Pistacchi – Citi

Lauren Torres – HSBC

Jon Fell – Deutsche Bank

Trevor – Sanford Bernstein

Chris Pitcher – Redburn

Mark Swartzberg – Stifel Nicolaus

Brett Cooper – Consumer Edge Research

Anthony Bucalo – Santander

Kris Kippers – Petercam

Edward Mundy – Nomura

Melissa Earlam – UBS

Pablo Zuanic – Liberum Capital

Gerard Rijk – ING

Dirk Van Vlaanderen – Jefferies

Caroline Levy – CLSA



Good morning and welcome to the Anheuser-Busch InBev Fourth Quarter 2011 Earnings Conference Call and Webcast.

Hosting the call today from AB InBev is Mr. Carlos Brito, Chief Executive Officer.

To access the slides accompanying today’s call, please visit AB InBev’s website now at and click on the “Investors” tab. 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. (Operator Instructions).

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 the management’s current views and assumption and involves known and unknown risks and uncertainties. It is possible that the company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial conditions indicated in forward-looking statements.

For a discussion of some of the risk and important factors that could affect the firm’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 the 12 th of April, 2011. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call. It should not be liable for any action taken in reliance upon such information.

It is now my pleasure to turn the floor over to Mr. Graham Staley, Global Vice President of Investor Relations. Sir, you may begin.

Graham Staley

Thank you, Maria. Good morning and good afternoon everyone, and thank you for joining our fourth quarter 2011 conference call and webcast. I’m joined here today by our CEO, Carlos Brito; and our CFO, Felipe Dutra.

In a few moments they will be making their comments on the results published this morning as well as providing an outlook on 2012. This will then be followed by a Q&A session. During that session, I would ask that you limit yourself to one question please and one follow-up question. This will allow us to accommodate as many people as possible during the call. Also in the interest of time, I would ask that you direct your technical accounting and reporting questions to the IR team after the call. So thanks in advance for your cooperation on this front.

With that, I will now hand over to Brito to start the ball rolling. Brito.

Carlos Brito

Well, thank you, Graham. Good afternoon, everyone. Today, Anheuser-Busch InBev reported another year of solid performance. As you know, we are committed to driving top-line performance by investing behind our focus brands and premiumizing our portfolio. This strategy continues to be successfully implemented in a consistent and disciplined manner in all of our key markets.

Volumes of our focus brands grew by 0.8% with our three global brands growing by 3.3%. Revenue grew by 4.6% with net revenue per hectoliter growth of 5.8% on a constant geographic basis. EBITDA grew by 10.7% in normal terms and 7.7% organically. EBITDA margin expanded by a 130 basis points to 39.3% organically. Our earnings per share grew by 27.4% to $4.04 on a normalized basis. Cash flow from operating activities grew by 26% to almost $12.5 billion, allowing us to reduce the net debt-to-EBITDA ratio to 2.26 times by the end of last year. And finally, the Board is proposing to shareholders an increase in the dividend of 50% to EUR1.20 per share.

As you can see, profitability remains very healthy. In fact, the fourth quarter 2011 was the 13 th consecutive quarter of EBITDA margin expansion year-over-year since our combination with AB, with our global EBITDA margin in the fourth quarter almost went 1,000 basis points ahead of the same period in 2008. This results have been delivered against the background of a balanced exposure to both developed and developing markets, with developing markets representing about 60% of our volume, while EBITDA generation is split approximately half and half.

Our three global brands, Budweiser, Stella Artois, and Beck’s performed well, growing collectively by 3.3% last year. Global Budweiser delivered growth of 3.1% on top of the 1.7% delivered in 2010. The Stella Artois grew by almost 6% with double-digit growth in key markets, while Beck’s grew by 0.8%, led by more than 4% growth in the brand’s home market of Germany.

We are particularly pleased with the Global Budweiser performance, the most valuable beer brand in the world as measured by the BrandZ report. The volume increase of 3.1% in 2011 is the second consecutive year of growth for the global brand, confirming our strong belief in the brand’s potential based on a clear and consistent global positioning. Execution at the country level has also been critical to the brand’s performance.

In the US, the rate of decline has been cut by half, and I’ll talk more about this later. In China, the brand grew by double digits, a record high, while in Canada the brand is the number one beer brand in the market, reaching its highest ever market share of over 13%. In the UK, volume reached the second highest level ever following the success of the 2010 FIFA World Cup activation. And, in Russia, Bud is now almost a 1% share brand in that market, following its 2010 launch. Finally, the launch of Budweiser in Brazil in August of last year has exceeded our expectations. We look forward to building on those successes and are excited by the plans we have in place for 2012.

Now turning to Stella Artois, Stella continued its global expansion growing 24% in the US, 13% in Argentina, and more than 200% in Brazil, although from a low base. We also launched the Stella Artois Cidre in the UK, which has rapidly become the number two Cidre in the premium market and is helping to further strengthen the Stella Artois brand. Renovations and innovations continue to play an important part in driving the performance of our brands and represented approximately 6% of our 2011 volume. With contributions from both new liquids such as Antarctica Sub Zero in Brazil, and packaging such as a Stella Artois Chalice can.

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