Q1 2021 Anheuser Busch Inbev NV Earnings Call
[music].
Welcome to the Anheuser Busch Inbev first quarter 2021 earnings conference call and webcast hosting the call today from AB Inbev are Mr. Carlos Brito, Chief Executive Officer, and Mr. Fernando Tennenbaum, Chief Financial Officer.
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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 a b inbev actual results and financial.
Condition may differ possibly materially from the anticipated results and financial condition indicated and these forward looking statements.
And the very best as he begins his new role.
When I joined drama and 1989.
And never imagined the journey, our company and I would embark on over the next three decades and.
I'm immensely proud of what this team has accomplished together.
With guilt, the leading and most possible global brewer with.
With the best brands and more importantly, the best people.
We grew the company, both organically and inorganically through industry defining combinations.
Today, we have an unparalleled portfolio of brands, including the most valuable beer brain and the world Budweiser and our two other leading global brands.
And code on it.
We became one of the top one of the world's leading FMC G companies with operations and nearly 50 markets our branch solely more than 180 countries and selling more than one a day.
Oh.
Of every four beers in the world.
I want to thank all 164000 colleagues of mine, who made this all possible through their energy passion commitment and resilience.
And it has been and honor and privilege to work with such a talented group of individuals as we built this global company based on strong values and our unwavering commitment to excellence quality consumers and communities.
I want to thank our shareholders net analysts for the time devoted to Abby and Bev and.
No you will enjoy getting to know Michelle.
Now, let me take you through our agenda today.
I'd like to start with how we at a bean bag were doing a report to support the global economic recovery.
And then take you through our first quarter results, including highlights from our key markets next I'll walk through our beyond beer strategy.
Campaigns through public private partnerships.
We're also leveraging our scale and reach to accelerate the vaccine rollout across our markets.
And the U S. Budweiser donated its Super Bowl airtime to raise vaccine awareness and.
And Colombia, and let COVID-19, vaccination campaigns and partnership with the Ministry of Health.
And Argentina were setup vaccination site administering 1000 vaccines per day.
We're committed to supporting our communities and doing our part to accelerate a safe and sustainable recovery.
Now let me take you through the results of the quarter.
Our business is off to a very strong start in 2021.
And we delivered balanced top line growth of 17, 2% comprised of 13, 3% volume growth and three 7% revenue per hectoliter growth driven primarily by favorable brand mix from the outperformance of our premium portfolio.
Our beer volumes grew by nearly 15%, while our non beer volumes grew by 4%.
Total volumes are ahead of pre pandemic levels as well with beer volume growth of two 8% versus the first quarter of 2019.
Healthy revenue growth and ongoing cost discipline translated to an EBITDA increase of 14, 2% and and EBITA margin of 34, 7%.
Positive brand mix and ongoing cost discipline was somewhat somewhat offset by anticipated pressures from transactional FX and.
Commodity headwinds and channel and packaging mix and an increase in our SG&A as a result of higher and higher variable compensation accruals, which are reported by quarter after zone level, depending on operational performance.
Our normalized EPS increased to 51.
While underlying EPS increased to 55.
We're reaching more consumers than ever before.
Our portfolio approach this.
This quarter, we gained share and the core and various segments across our markets.
Premium portfolio grew by double digits, and our beyond beer business grew by over 40%.
Our digital platforms continue to gain scale with our <unk> platform beef, capturing over $3 billion and gmg in our owned E Commerce business quadrupling and size.
Now let me take you through some highlights from our key markets.
And the U S. We delivered top and bottom line growth driven by the consistent execution of our consumer first strategy.
We continue to strengthen our industry leading portfolio by rebalancing.
Toward faster growing above core segments.
In Mexico, we delivered top top line growth of high single digits with both volume and revenue per hectoliter growing by mid single digits outperforming the industry.
Our business and Colombia continued its strong momentum delivering top and bottom line growth above 20% with robust performance across all segments of our portfolio.
Our business and Brazil delivered a strong start of the year.
Beer business again outperformed the industry. According to our estimates growing volumes by nearly 16% and above pre pandemic levels.
And Europe, our business continues to be impacted by significant COVID-19 restrictions.
And our own beer volumes, excluding third party volumes were flat year over year, as we delivered double digit growth and the off premise channel powered by our premium portfolio.
And South Africa, our business was significantly impacted by a one month government mandated ban on alcohol sales, which resulted in a volume decline in the quarter.
Once the bandwidth lifted which saw solid underlying consumer demand for our brands.
In China, our business delivered over 90% revenue growth, surpassing pre COVID-19 levels driven by ongoing amortization.
Volumes grew by nearly 85% estimated to be ahead of the industry.
Now I'd like to spend some time, highlighting our premium portfolio.
The amortization of the beer industry remains one of our most significant opportunities for growth.
We have been investing.
And to build a diverse portfolio of global international and craft and specialty premium brands across our markets, making us the largest premium brewer in the world.
Our premium portfolio now represents more than 30% of our total revenue and increase of more than six percentage points from 2017 and grew by 28% and the first quarters.
This growth is accretive to our bottom line as our premium brands carry a higher dollar profit per hectoliter than our core brands.
Our global brands continued to lead the way implementation with global revenue up by 29, 5% and by 46, 4% outside of their brands' home markets, where they typically command a premium price point.
All three of our global brands, Budweiser, Stella Artois, and Corona grew by double digits versus the same periods in both 2020 and 2019.
Now I would like to take you through our strategy to drive growth and beyond beer.
Offered by traditional beer wine or spirits.
When exploring and space, it's key for us to understand and map the specific opportunities, while we have the capabilities and the right to win.
Our team stay close to emerge and trends and the beyond beer space and are empowered to invest and both organic and inner growth inorganic growth opportunities.
Each of these opportunities goes through a seat and launch phase designed to test to learn and then you the growth and scale or pivot fast.
Successful organic ventures include beats and Brazil.
Brutal fruits and South Africa.
And the inorganic side, we have had added brands such as cup water bed and neutral for our portfolio as well.
We're building and strong and diverse portfolio beyond pier products globally.
Relaunch and Mike's hard Ah brand, we own everywhere outside of the us across our footprint.
And it will be available and more than 20 countries by the end of this year and.
And both the Mike's hard lemonade and Mike's hard Selsor variance.
And the us our largest beyond pier market that represents approximately half of our global beyond Bureau volume, we have significantly enhanced our presence and the heart Selsor segment with Bud light Selsor and the more recent launches of michelob ultra organic selsor and cacti.
We're expanding products like heart Selsor to new geographies example, is the launch and Michelob Ultra heart cells and Mexico.
And it has already capture approximately 45 per cent market share of the developing Sosa segment more than the next three brands combined.
Our portfolios already global with the wrong Lady brands and approximately 40 countries.
Are beyond via portfolios growing fast.
The business deliver one to been and and revenue and 2020 and groove over 40% and first quarter 21.
This incremental growth is also accretive to our bottom line.
On average are beyond via products have a 20% higher gross profit per at cleared and then our traditional via a portfolio.
With that I'd like to hand, it over to for and number to discuss our financials Fernando.
Thank you brittle with morning. Good afternoon, everyone. I Hope you are all safe and well let me first take you through the drivers of our underlying EPS.
Our underline EPS increase it by force.
6212.
255 cents.
And a strong performance and the collective drove and increasing a bit that equates to 15 cents per share.
We are also we also recorded lowered net finance class War.
Six cents per share.
These benefits, partially offset by higher Noncontrolling and Chris Force eight cents per share, resulting from higher profits I'll forward listed subsidiaries Foodwise at APEC and Embeds, along with the issuance of $49, 90% minority stake in our U S base.
Metal container operations in December 2020.
We also saw higher income taxes expenses due to count premix and reduce it benefits of text attributes was seven per share.
And it's like 20 true you see that our best and maturity profile Israel distributed across the next several years with most significant matutes over the next five years we.
We maintain it more than $24 billion of liquidity at the end of 2020.
As a reminder, we do not had any financial covenants on our entire debt portfolio, including our sustainability Lincoln revolving credit for seats.
Our bond portfolio remains largely insulated from interest rates will activities as approximately 96% holds a fix it and rates for.
Furthermore, the portfolio is comprised of a variety of current says we 51% denominated in U S dollars, 37% in Euro and a reminder, and current system such as Canadian dollar pound Sterling and Corey and one diversifying our effects risk.
And.
The weighted average mature reach of our debt portfolio is more than 16 years.
Finally, we continue to have a very manageable weighted average coupon rate of approximately 4%.
I will now take you through our capital location priority, it's we to remain and change it.
The first priority for the use of cash is true invested behind other brands and to take for advantage of the organic growth opportunities in our business.
Declan.
Day, leveraging to around two times net debt tribute the ratio remains our commitment and we were pyrrhotite debt repayment in order to meet these objectives.
Dirt with respect to emanate, we always be ready to look at opportunities when and needs to be a rice.
Checked chihuahuas strict financial discipline and deleveraging commitments.
Our force priority is returning excess cash to shareholders and.
And the form of dividends and not share buybacks.
Before heading back to Lori to begin to Q&A session I would like to announce changes stroller investor relations team.
Loading habits, our current head of Investor relations will be assuming and new position as the global VP of economic policy and continue reporting to me.
Sean flow, who has been and the company for 10 years through <unk> lighting as our global VP of Investor Relations.
And now over to Laurie to begin the Q&A sisters.
Thank you at this time I would like to remind everyone. If you would like to ask a question. Please press star and then the number one and your telephone keypad. If your question has been answered and you wish to remove yourself from the queue press. The pound key we ask that you. Please pick up your handset to allow optimal sound quality.
<unk>.
Our first question comes from the line of chatter Sterling of Bernstein.
Good morning, Brito and Fernando So first you've written and no questions, but just a big Thank you from me for 15 years of patients going through earnings cause 15 years follow up sessions.
[laughter] uniformly polite and patient with all of our questions and thank you very much and best wishes for whatever the next chapter holes.
Thank you travel and we have been a pleasure.
Thank you does day.
Answer the questions and.
<unk>.
The nominal price mix and beer, Brazil, I think it was 12.6% and the Ambev account can you give us just a little bit of color.
Combination of price and would you Pomo total pack make a premium brands et cetera drove that very very strong price snakes and.
And it took longer term bigger picture question, you're quoted him Bloomberg is saying that's N. Michelle is more in tune with the next day and what's needed and I'm wondering if you could just tell us a little bit about what you think and activities Michelle's decision ultimately what that that would that phase will be different from the recent past.
Well thanks for the question.
Trevor itself to your first question about price and Brazil.
Indeed, I mean revenue per I played and Brazil.
Grew by revenue clear to grow by 10.7% and Q1 21.
Primarily due to positive mix from beer growing faster than non non beer. So that's the first thing and revenue management initiatives and both our beer and on their business. So.
So the Brazil beer net revenue growth.
Was due to Ah.
Combination of factors promotional activity strategy like you mentioned.
Price increased carryover from last year and a positive brand mixed portion of set by back next so brand mix and Brazil was a big factor here.
So that was a bit of the explanation.
The net revenue, Brazil net revenue per <unk>.
And certainly Michelle.
I said is that.
Michelle Michelle and I have very similar.
There's so many many ways and that we both believe strongly and our culture and our values and our principles with both prioritize people above all things.
And we both believe that our internal colleagues are our greatest assets and strength so no change there.
Let me show has that a different career within the company.
And I buy came from Brazil, and to Canada, Belgium and global.
Michelle and from Brazil to China.
The U S and he led those markets.
Many Chinese saw consumer that was very digital.
A market that was very fast in terms of innovation and everything was volatilization, a business of hours and China that was all about premium superpremium very different and other markets of ours, and which we lead the profitability and China. The profit boot China, we lead by far even if you add the next three and four competitors as you know and Trevor and.
So he sold out and China and then he came to the U S.
He was quickly to build a very diverse team very talented team and he understood. The U S market, where consumers are going the trends and.
Sites and.
Free COVID-19 optical June COVID-19, and he was able to come up with strategy that was simple and <unk>.
Active that worked and that has been consistent.
So I think he brings a new set of experience within a company and.
You know fresh their advice.
So and right now is you know.
We're very big on our business transformation enabled by technology, you've seen R.
<unk> platforms, BTC platforms direct to consumer platforms, and the metro and our company's deliver insurance form.
So if you look on a business.
And last year travel second have this year, it's not a very strong momentum gaining share growing volumes, you know numbers and P&L makes sense dutiful.
<unk>.
And so we're delivering and at the same time with just one.
If you look at all our <unk> business it's.
Has already 25 per cent of our customers already and bees.
G&P growing very fast if you look at our day to see also growing very fast our day to see had almost 20 times as many orders and 2020 as it had and 2019 and despite that strong base. We grew again and this first quarter 50%.
And on top so.
I think it's a very strong.
But and momentum, we have and both deliver and transform and Michelle.
Michelle is very tech savvy and I think you will continue on that journey. So it's the world's changed and fast we have a new combination of levers going forward as you know between delivering transform and and shows very attuned and he was part of the.
Of the strategy.
Elaboration. He was part of my team so key member and elaborated and strategy and so is very supportive strategy.
Thank you.
Okay, well, thank you very much.
Thank you <unk>.
My next question comes from the line up and our Oregon of Morgan Stanley.
Hi, Thanks for taking my question retail and Laura and all the best for the future and congratulations to Michelle and Sean for your new roles I have a question on pricing and commodities are you confident about <unk> ability to pass through rising input costs prices. As you look ahead to the remainder of 2000 and.
21, and even 22 or should we perhaps be more cautious about the margin evolution going forward and.
And if you're planning to raise prices how would you go about managing the volume response to that particularly and Marcus like Brazil, which are facing some tough comps later and the year now and this question is about the whole group globally, but it would be very helpful. If you could please also comments on Brazil, specifically thank you.
Yes, hi, so yeah.
Going to these questions first and then our loans strategy is not a long term strategy has not changed our price is in line with inflation and we also passed tax increases to the consumer. So that's a long term strategy has always been it doesn't mean that it's true every quarter every year, the pain and the magnitude of changes but.
Long term, while we had it with.
With respect to pricing will take many factors into consideration at the local level price and as a very local thing.
So to try to strike the right balance is you said between volume and price.
So we've taken into account inflation, not only CPI bebear inflation.
General CPI, but also be inflation and we look at the health of the consumer we look at affordability relative gear places to other substitutes taxes competitive environment, but lots of things that go into making a decision about pricing and it's a local decision.
Your rights with Clinton C and inflationary environment across some of our main markets, including the costs of raw materials and is there.
It'd be a relevant consideration for sure for our price and decisions. It's also true that and a lot of our 12 months rolling hedging policy, we're facing this year.
Impacts debt were bored last year and terms of transaction effects and commodity headwinds.
We had last year.
And the other hand are hedging policy and give us time to plan and to react and to work on initiatives to offset those impact.
So this year 2021 top line growth is expected to come from a healthy combination of volume and price of said before.
And last point is that our industry leading.
Profitability gives us flexibility to weather short term volatility preventing us from having to make any short term decisions that could be detrimental to the business long term. So line gas or if I just give you a framework on how we think about prices and Brazil different.
Cause there's no different Brazil will fall and the same kind of.
Guidelines and.
Thinking about.
And thinking about pricing.
Thank you very helpful.
You're welcome.
Our next question comes from the line of Olivier Nicholi of Goldman Sachs.
Hi, Good morning, just to first to follow up on on 12, those questions and as a revenue factory J and creating Blizzard and chihuahuas Schwartzbach true strong and I was just wondering houses to anybody's that's kind of cool and for how long do you think about rejection and promotion we lost and.
And then the second question is on the actually and Nigeria, you mentioned a supply constraint and I was just wondering if it was really keen to to capacity you being at full capacity and when do you think this would be resolved. Thank you.
I will start to adventure and so Nigeria, there were many issues with supply.
For various reasons and.
We have.
A disadvantage that is going to be fixed which was and we don't have much warehousing and support level and that gives us a disadvantage compared to other competitors are there in terms of and adding more stuff and house and when the ports get congested. We don't have debt buffered. So that's going to be corrected. The other one is that we had a fire.
And our Nietzsche brewery and that impacted one of our production lines. So that was also.
Something that was a problem and the third one was that we started the year with very low inventories because we had such a great.
Fourth quarter and we also had those protests last year and also caused as soon as some day as a production.
So you combine low inventories, which supply chain challenges and.
And.
With a fire and our brewery.
So yeah, that's the explanation, but all those things are transitory and nature.
What's important to say, Nigeria that are brands are very strong and we have the strongest Brent and the country.
And.
And.
As soon as things are six will resume our.
Our momentum I have no doubts and ginger pricing and Brazil.
We have historically taken.
Prices.
Every year pretty much.
We continued to.
To look and prices, we just took a price increase.
And June.
Right totally announced that we're going to take a price increase and June by the same.
And so again are pricing and.
Performance and presumed Q1 has been because of the carryover we had also because it permitted nation.
Also because of innovation.
Right. So all those things were very important.
We are of course looking at the inflationary environment.
That is happening Brazil.
And we intend to.
Keeping that balance between share net revenue, but of course that would be a very important and a <unk>.
Components, and our price increase decisions.
So again not very different from how we do it on a global basis.
But.
Yes, Brazil, we alert because everything inflation pressures, there as well as and other countries.
Thank you very much boy two four and for your time over the years and and congratulations that's true for implementing says and bringing people together for a better world that jumped out which I'm sure over the last 15 years as you as a few other and must have been back and many other people.
Thank you. Thank you very much.
Your next question comes from the line of Simon Hales of city.
Thank you hyper too and undo could I also just like everyone else's comments. Thank you for your time and wish you with every day.
And thank you.
I had a couple of questions and close group and I'm Gonna fall asleep and thanks for providing day EBITDA guidance today could I interest so to clarify EBIT built base and 2020, you're using to to make that assumption that 8% to 12% organic growth room, I think I remember you reported other things $17 3 billion of EBITDA.
Last year, but that didn't cleared almost $500 million and key for what I think was blown off.
Credits in Brazil, and I, just wanted to make sure we're starting off with the rights total base.
And and secondly, I wanted to ask you a little bit more about the distribution agreements with south of rock and Red Bull, you've signed and in China.
Where do you put the stress you use that and could we see more of those sorts of distribution Paul.
And the spirit suppliers in other markets, who was this week and just to China specific initiatives.
Hi, Simon sit and number here and I'm going to get the first one and and whatnot.
True true veto on.
And the first one and it's group the Brazilian tax credits, we excluded last year from the regarding performance and and you had excluding that from from the guidance as well.
So it's organic and beta.
Growth guidance, 8% to 12%, excluding the vezina and tax credits.
Got it.
And in terms of the second question in terms of the second question. I mean this partnerships are total connected to our premium edition strategy and China that has always been our strategy. It will further enhance so a portfolio of beyond beer.
This segment that is growing so fast.
Very excited to include this premium spirits include and fireball.
And the premium energy drink on a global basis Red Bull far beyond Bureau portfolio. So we're going to be the exclusive distributors and mainland China.
It will start on June 1st and.
And it will include Fireball Buffalo trace southern comfort and other premium Spears from Sazerac.
This will allow us this will allow us strength of the high and spirits market and China. So Jerry excited.
And it will allow us to capture difference drinking occasion difference diverse drink and locations, which are complimentary to beer.
And in terms of rebel and it's great to have that national distribution partnership.
Knowing that Red Bull, Israel nodes are leaving premium and energy drink and that again, we will enable us to target broader drinking locations and simple say that both portfolios a margin accretive.
And both in the shoes are expected to grow as consumers have stronger by and powers and we'll be focused on the region's we're probably consumer demand based on our market maturity model.
And just the last sports and many of our premium wholesalers.
Which already operates and nightlife and west and bars are very interested and expanding and to premium spirits business. So this is true Bryan is true brands or two brand portfolios be added.
Can create positive synergies with our existing portfolio and route to market. So it's win win big time.
That's great cause it and I'll just come back on the call.
Again and and just.
And you could just sort of share a little bit there a bit about the shape of margin development through.
Through the remainder of the aliens clean and lots of moving parts going on with the transactional ethics then.
Headwinds and the first half and Latin America, particularly severe will probably easing and into age too, but then also and he's been getting into queue to get you the easier marching compiler tips and and it was like Mexico, and South Africa, giving me issues last year I should be just think about H. One vs. Hte margin development that rule clearly full year margins are still going to be.
<unk>, but.
And I'll, just can be worse, and the second Hulk and they'll go over the phone.
First half of the group level do you think any color you can get the help us with our modeling please.
Hi, Simon and we are not being so precise about collected and closet, but as you would expect that property, we have the easier comps on queue true given that was reflected there was mostly affected by it by COVID-19 last year.
And also and also we know that.
The first half of the year, especially Q1, we seem less pressure on effects, then you're going to see to watch the the end of the year.
And age jewelry, and we went ahead and slightly more commodity pressure.
Given given our 12 months had parties. So you just look at how distraught and destroy both effects and commodity behavior last year and you can extrapolate net for 2021.
But we are not being surplus signs of how it's going to be the impact everquest.
And that's really open and thank you and thank you for two and all the best thing.
Your next question comes from the line ups and eat Ocelot I've kind of sleep.
He agreed to Fernando a couple of questions for me. Please.
Sincerely on middle Americas, pretty pretty exceptional volume performance, particularly looking against free pandemic levels.
What's really driving that and that is an Easter and it's humming benefit maybe maybe helping that and my second question do some bees.
Based on your learning so far what are the biggest opportunities here is a category extension.
Is it revenue pet to be tough is it is it a combination of both let's get your first and that thank you.
Hi, <unk> in terms of Moslem and Mazda has been always for many years now.
Source of amazing value creation, and this quarter was a little different.
The portfolios growing because we have we understand consumers and we have a portfolio that is a winning portfolio all our brands are gaining brainpower.
We have an amazing execution Michael beliefs.
We also develop into platforms of bees, and also need to see direct to consumer we'll have them and the Lord AMA with the little and stores that will be a big help to develop faster did not smile to consumers and and our DTC efforts.
And we have the ultra expansion it.
It is true to say that.
Two thirds approximately of the portfolio of our share gain and Mexico is due to our internal factors and one third towards so.
So and notices too there's lots of votes and to come but again and it's also interesting to say that our portfolio continues to grow even outside of <unk>. So it's about accidents and operations. It's about interest and consumers is asking the right brands and your portfolio that appeals to the to.
The segments occasions free COVID-19 June COVID-19, and we're thinking and your normal innovation, but it's really all this together.
In terms of bees.
Is brings a whole bunch of it's a whole bunch of possible is think about this and you'll base. There was a sales rep that would go to a park.
And that sales rep would sometimes chern heed to leave the company for some reason and we'll get promoted and there'll be somebody else. So visas and investment income customers interest in a box and twisty.
And it's capturing data.
That won't go away and.
And the Kings of sales Rapids, the sales would leave and sales rapid leave that day that would go away and part of it.
Never transaction. There is you have more data points.
This data points, you have optimization engines in terms of price and assortment promotion.
Suggested orders all the things that are behind the platform and we get to north customer better and as you get to move their customers sparkles were better we offer them things that are more relevant to their business and make them more successful and as they grow will grow as well.
As to your question, Yes, it's drive incremental revenue growth and.
Through the exploration of our base business and expanding to new offerings like marketplace.
These captured over $3 billion and gmg in the first quarter, which is equivalent to Virginia. Each capture it captured for the whole of last year, So a growth and more than 50% from the fourth quarter is already lively and 11 markets and the Americas, mostly.
And seven markets out of the 11th more than 50 per cent of our net revenue.
Through these and we continue to extend and we how we now have 1.5 million users monthly action active users and our platforms and that's a 60% increase vs December last year.
This is not about cost reduction is the bulk elevating our relationship with our customers by addressing their pinpoints any hansie their business performance if they win we win.
So a big transformation initiative, and it's redefining the way our sales operation works.
Great. Thank you for your time of the of the is free to invest switches for the future.
Thank you and you.
Your next question comes from the line of Lawrence client of Barclays.
Hi, Thanks, very much for the questions a couple for me as well firstly on your guidance of age 12% EBIDTA grapes organically I was wondering what are your assumptions on the various external factors that are going on clay, please say, particularly around COVID-19 and so.
Various reopening plans.
Sensually happening and Europe, this quarter and what what are your and tunnel expectations.
On those sort of government restrictions in order to hit guidance and secondly on bees, you gave a number of geographies that were particularly successful and where did you see the next rollout taking place for about the software and thank you very much.
So and then in terms of our guidance.
And I'll have to talk about what what a change because the basic guidance is two totally true because we said that we expect top line growth from a healthy combination of vitamin price that is true.
We said that we expect our top and bottom line results improve meaningfully vs. 2020. So everything was said there it's true.
But we added to it.
So why we added.
We had a very strong Saddam year.
And because of the global developers and and the fight against COVID-19, and so we decided to specified that we expect already talked to grow between eight and 12% and our revenue to grow ahead of me to start from a healthy combination of volume of price.
As you see his numbers to meaningful numbers. So we've been changing and we just didn't sites assessment specify and why we did that because of two things the strong side of the year and many of US in terms of vaccinations and openings that are now more current.
This guy's and as you said is based on some assumptions.
First assumption is it reopening rates particular day on premise channel and they continued at the current pace that's our assumption.
And no full operational shutdowns and our markets and there's a sign South African in January so, we're not assuming anything of that sort going forward.
The transactional effects and commodity costs.
Well as we know be worse and 20th range so that kinda.
Fourth the channel and package mix improving throughout the year, we will continue to improve and better than 2020 and.
That's true worse and 2019, so somewhere in the middle between 19 and 20.
As situation continues to improve and restrictions are east.
And the last one and that leads to you and you're increasing variable compensation and driven by improved operational performance as compared to last year. When most colleagues didn't receive a bonus. So that's also something to think about it all compensation systems connected is directly connected to value creation and what you investors field.
If you have a good year, we'll have a good year and have a bad year will have a value and last year was a bad year. So we also had no bonus. So this year given the strong start give.
And given our guidance we are beginning to build the provisions four hour.
Gabrielle compensation and that is something that of course, and pats SG&A and.
Of course, the payout will depend on the final your achievements and also depend on cash flow revenue growth and organic EBITDA that are the other targets but.
Given the strong side of the year and the fact that we have in our specific guidance toilet and we're also a cooler and more bonus which impacts SG&A, which impacts Marty.
In terms of beef.
As I said as I said before because of transformation activity for us very excited it's amazing if you could get two to three years and it says writing code code that's useful to a box that slightly adopting will not forcing them to adopt adopting because it makes their life easier their business more successful because it's more.
Relevant to them because the platform knows more and more average transaction about what's interest you put down what makes shrimp for them and we.
We are pretty much and get Americas, but beginning to branch out to other countries.
Perfect yet, but we will continue the rollout.
Of course specific markets would be.
And will be communicated and do of course.
Yeah.
That's great for each other thank you very much and and Ah Okay.
Everyone else has come in to the best of luck with the next day changing your mind and the journey. Thank you very much.
Thank you Laura and thank you so much.
Our next question comes from the line of Mitch call and have Deutsche Bank.
[noise] I Brito.
Two questions. Please one I think is from Saddam day, and can you, perhaps provide a bit of color on tax guidance of 28, 30%.
And I appreciate this probably lost moving parts, but that's why it's a lot higher than the E.
<unk> and twenty-nine sheet can you, perhaps give them some guidance on what sorts of level, we should expect for tax and the long term.
And then just the abroad a question on on margins and clear.
Clearly this isn't a normal yeah, and but your guidance, obviously suggests marches will be down vs 2020 and.
I think margins peaked EBITDA margins and 2018 and can you see it back to that level of profitability long term and can you talk about the drivers to get you there.
And.
And each for number here so let me start on that one so.
Our our effective tax rate is a function of the countries revenue operates.
And you should do we should look at.
They're right there.
Rates of the countries, who are at eight and the account and and because we actually produce and paycheck smoker and each one of the counters and I would effective tax rates easy.
Somewhat similar.
And we we decided to similar to a rigid and via organic Kibitka growth, we decided it was appropriate to to fight.
And and put it into the guidance for this year that we expect to be and the range of 2830.
So so we're not giving any guidance further out.
But but probably you can always refer back to what I mention and the beginning that our current tax rates.
And is similar to their wasted our garage and thanks, right on the country's and retrieval credit.
And so that.
Okay.
Oregon.
Oh.
I was just gonna follow up and say does that imply that.
If you get back to the and geographic split you had and 2019 and it's more likely to be closer to 2019, and then the guidance you've given to.
And to 21.
You know, we we have a different geographic split it doesn't and 19 than the one we have now and we have different countries growing into different rates water and saying is desktop current tax rates and.
One way or guising.
Very closely related to their to their wasted avinash tax rate from the countries from each of the day and really trippy sex, Texas locally.
Yeah. So.
Guidance for this year, but they're not giving any guidance so far for the adults.
Okay.
In terms of second question was above EBITDA margin recovery right.
Michio.
Yes, yes, so in terms of the day.
David margin.
First I'll have to look at it and it's about margin the context of many other things.
But.
Talked already about this and some other calls.
But.
I think what's important to in terms of EBIDTA module recovery is that a couple of things will make that margin go back.
Okay. So.
Right now, we're being pressured frozen things, we know what emerging market currencies.
Dislocations by COVID-19 in terms of brand channel mix package.
All those things that creating.
That kind of pressure and margins and also just the volume day leverage cause volume went down.
So what's going to recover margin.
It's going to be volume.
Growth as we resume growth like we have now as your resume growth that's going to be very important for margin. Because then you'll have debt volume.
The volume leverage coming back to play, which has always been part of our margin structure.
And trade reopening will get RGB, the returnable glass bottles back and place, which has always been important and all margin structure. The.
The growth of core pleasant premium portfolio, including beyond Dear that will continue.
To possibly in fact, our net revenue and dollar margins that will be key as well.
Okay, and that's something new that was not present and destructuring the past the.
And the inhibition pipeline that we're getting better and better and at as we go beyond Pier included as you go to other occasions with and Dear as we expand our portfolio fall and consumers because that's for growth is.
And again, that's going to be key.
And a lot of innovation is and the core pleasant above.
And as we invest strategic Capex and things like technology B BB to see those margins are interesting very interesting lenses business and you have to scale and.
Correct footprint deficiencies, we have as we saw some supply chain bottlenecks, we have and.
And as we.
Continue to invest and getting closer and closer to consumers and customers with more information.
And that would make our marketing dollars more efficient as well and.
And are strong financial discipline around costs and expenses and general.
That has always been a hallmark of the company so.
A lot of those things I said, we're part of the old margin structure.
Somewhat presence here somewhere new but what I can tell is that debt reference you have in mind and I have in mind will continue to be the high watermark that we all intend to get too and go beyond.
So that hasn't changed but when you think about emerging markets and the last few years has been a tough Reds and terms of currency effects and also commodity as well.
When you think about COVID-19, our industry was one that was the hardest hit together with.
Hotels, and travel and and things like that why because we're dependent on channels that were 30.
One third of our business and it will shut down.
Like the entree.
And we had businesses ahvaz, like and Mexico, Peru, Ecuador, and South Africa, and that was shut down for two months or more and will continue to have restrictions and the only country that stilly without restrictions today's China.
And all other countries other hours have some kind of curfew, some kind of mandated closing hours and time of.
Restrictions. So we're not there yet so is there a cover all of that we have in mind. What you have in mind, which is to go back to the kind of margins and with someone who had prior.
And the other hand, I think it's important to see that and our business growth more and more and to other categories. We need to think also dollar margin as opposed to just scimitar margin. Thank you.
Thank you very soon and thank you for your help and patience Hovious and best wishes the feature.
Thank you Mitch.
And our next question comes from the line of Edward Monday of Jefferys.
Good morning free to fit under.
Two questions for me the focus is to points of tough cash and on the guidance I think the guidance of eight to 10 reflects your current assessment on the scale and magnitude of the pandemic.
Slapshot based on what you're seeing today I appreciate you got a crystal ball, but if underlying conditions improve further and.
And you'll get a feather reopen and grow with the entrees comes back quicker is not reflected and the guide first question of and and the second is really run these and to what extent this as a facilitator of improving execution, you've been pushing portfolio. The portfolio game for several years now since you said would be transaction to the country expansion model, but you all start and could you some pretty decent.
<unk> and tons of volume picking up market share premeditation and really given the portfolio moving the right direction question as to what extent is the the real facilitates the oldest improving execution.
I had said and number here so I'm going to take the first question. So just a clarification. Our guidance is not eight to 10 is 8% to 12% that would've been growth and Vista and our <unk> our current assessment today.
On the next quarter's it forever reason to receive the conditions moving to another that action then and we will give further updates but for now and this is our best gentleman best assumption and that's the one that to a comfortable.
To share.
And is that based on the level of openness wrightwood as we see today as opposed to what you think it's going to look like and three six months.
It's it's basically and the data and they will have to day, which is the current status of day markets and our assumptions on how their markets and revolt.
The reopening right. So what is going to be the face hopefully open.
The opening of the different markets on brand, new so and other restrictions that and all that is the current assumption and that is what embedded into the 8% to 12% guidance.
Okay. Thank you.
And the next one for north.
And.
Yeah, and Arizona second one if I understood correctly.
You ask him about category of expenditure framework right.
And the framework and be using since 2017.
It's it's more a question of to what extent and fees is really accelerating the market share performance as well as the revenue patchy to step up.
You mean vs.
Yep Yep.
Okay. So I haven't understood and question no no for sure I am and be just something that I think about this.
Every time, there's a transaction with a block vs.
Captures every think about that transaction.
Other customer navigated the different screens and the App.
And made him or her stop what kind of things we offer that he or she didn't click on so let me and you start.
Having an idea of what kind of customer you have on the other side of the App and because of that do you have a whole bunch of all will rhythms net are optimizing for different functions and.
And in terms of assortment in terms of.
Premium or less premium offerings to this book given its profile.
And in terms of pricing and terms of promotion in terms of new launches. So and this is learning every day and.
I'm, just not dependent on a human being that leaves tomorrow, so drop or and kind of civilization that forgot to put something on the screen is and observation.
This captaris every piece of data that we get for every interaction. So the more directions you have the more of this.
Email and.
And machines and and the the the.
Optimization engines become better they also help.
Given the profile of the park and help execution drivers and the Fox. So they say okay for this Clark's execution driver is one two for this one is three four.
And we will continue to have a b D R.
A business development rack that will continue to visit and less frequently so whenever this person goes the algorithm and you also tell what Ken increased sales and that park compared to the neighbor pluck showbiz driven by.
Hi.
Algorithms that are smart and trying to optimize functions. So yes.
The incremental revenue growth.
Enables better execution.
Getz criminalization up.
Expanse or sportsman.
Deals better without a stock.
Because the the optimization algorithm and say hey.
I know algorithm knows the calendar. So knows there was a a football game coming next week and and maybe the order that came with a suggested daughter is already implicit or already has that implicit net the game is coming up so the suggested order will be higher and we see and.
Every time that be every day to go status to see more and more customers adhering to the suggested Oregon, because it suggested order knowing everything about the customer is being more relevant and more.
More tailored to the customer.
No that's.
And times to them because they we offer them in terms of new news is more tailored to what they need and we are and what we offered in terms of suggested order is very close to what they need they don't need to check inventory and do the whole thing so.
Lots of benefits that will come from this.
Thank you and and many congratulations and all your achievements vs Possiblity.
Thank you so much and.
Our next question comes from the line of Laura conduct of Guggenheim.
Hi, everyone and congrats Brito far extraordinary carrier, beating <unk> two day.
So thank you [laughter].
Yes, so [laughter] and then there cannot sort of up M. B U K may.
It's Moore and some of our profitability what nature understand and Ah Ah much income with what are your theories and I mean, a tease right now to the your district.
And distributed did Ya distribution network and.
The way you you see these expanding and neither and you see and achieve leverage that you could get by giving you. These business bigger. So that's my first question the signal and want to read more on the subject of the jury and.
You've been known she saw him spirit bays and <unk> I mean, it could tie here and the U S.
Water and so I mean, I might squeeze a vote cafes do you think it's it's it's a good I've been Youtube to disrupt basically the the two leading brands and the U S or and square so I'd like to try to send it to your your view on street based and not censor. Thanks.
Yeah in terms of Ah I think your first question was about bees right, yes, correct perfect ability yeah. So so again and at this point, we're not really.
Giving much numbers in terms of incremental revenue growth subsidy and generated or assortment or guilt.
Brutalization, because the zone competitive sensitive and we believe bees as a day transformation initiative of our company, but were saying things like you know and seven of day 11 market share of business today more than 50% of our net revenue or sales is already there were saying that 25 per cent of our global basis.
Customer is already connected and.
60% above what it was December last year. So, we're we're giving some data points there.
And and so.
Or other question in terms of spirit space and is very much derived bye.
Country specific consuming sites.
And some countries the pain and the competitive environment, depending on what people used to drink we see more fit.
More and more and more based beverage or more.
More distilled based beverages.
Something that.
And can be adapted you know received and here between Canada and the U S.
Some beverages have different basis.
This has to do with some local habits and our beliefs that will be more successful if we take those into account.
Thanks, Brito and I wish you well for whatever okay come next thanks Bye.
Thank you so much thank you very much.
Our next question comes from the line of Robert and seen I've Evercore.
Great. Thank you very much and of course, congratulations Lauren and Brito for for great.
Accomplishments and and Brito for us and phenomenal career, and and and building and unbelievable company.
We're we're kinda long and the call now so I was wondering maybe maybe if you could reflect.
On your tenure as CEO and.
The two or three things, perhaps that you're most proud of in terms of your accomplishments and that will really put.
Put the company and very good position going forward, and and maybe highlighting or accent and things that you don't think maybe fully appreciated by investors along those lines, but are are very important to you. Thank you.
Thank you Robert for your nice words and.
Let me say that I mean, a couple of things. So first Adrienne people cultural platform you know we'd build the principles company a company that has principles dream people culture, and good times Bad times COVID-19 free COVID-19 true COVID-19, we abide by those principles and that's.
Halloween build a company and so I'm very proud of that.
Second my proudest moments and the company has been really C. R people developed blossom business developed.
And other one Robert has been the consumer Centricity.
Put consumers first our customers force quality of our products during the.
Business day, right way no shortcuts, that's connected to the culture as well, but always had and consumers and mine and we go and consumers grow because that's for the businesses.
The other thing is that we're very self critical of ourselves so and some years ago. We saw that the world was going faster than we were going we created Z X.
Z axes invest and adventures.
Proved like ones and twos would be to BB to see.
In terms of craft specialties.
No bigger than the amazing job with their team he gathers that there was no.
<unk> bees, and Bob low do VTC, so different people involved.
But the results started was the X and.
And when I look at our transformation agenda that tells me something about our culture you know.
And sometimes that we're not perfect, sometimes and behind the curve.
But when we say we're going to do something we would do it.
And we said we're going to start getting the transformation agenda accelerated that's exactly what we're doing and today Robert.
I will leave the company feeling that.
We're out of the curve and.
And that is we have momentum and.
And Richard for me.
And the business, so as I say here with delivering and transform.
And who are doing one but not the other now and fuel. We're ahead of the current both and.
And Michelle is the right person.
To continue that drive is better than me in all respects.
Including having more hair than I do so I mean, you see.
Really.
And.
And we get along very well he is widely respected and the company 25 years led the three most important markets we have.
Together with Mexico of course, and Colombia, and South Africa.
And.
And yes, it's kind of it's been a great right and.
And <unk>.
No regrets.
Terrific. Thank you very much again, and congratulations to to everybody and and looking forward to.
See where where Michelle takes this company. Thank you.
Thank you Robert and again, thank you everybody and summary, we remain focus and I'm doing a report for the recovery.
Through meaningful investments and local economies and by supporting the global vaccine rollout.
Our business is off to a very strong start and 2021.
Well delivered double digit balanced stop line and EBITA growth, even in the context of ongoing COVID-19 related restrictions and.
And the industry, leading portfolio brands's connecting us with more consumers and more occasions as demonstrated by volume. So I have 2019 levels were solely real customer and consumer needs with our digital platforms connecting is more closely to those with serve worldwide.
As the old overcomes COVID-19 are appropriate zone, bringing people together for a better world is more relevant and ever thank.
Thank you for joining the call today and thank you for your partnership over the last 32 years and we're gonna.
Issue, all the best day safe and healthy and thank you very much for your support and time and have a great day. Thank you.
Thank you and that does conclude the Anheuser Busch and Babs first quarter of 2021 earnings conference call and webcast. You may now disconnect your lines and have a wonderful day.
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