Full Year 2022 Anheuser-Busch Inbev SA Earnings Call

Speaker 1: Nightfall? I bet you liked him burger the break? Just One ?

Speaker 2: Welcome to Edhub's Publish in Bev's full year and fourth quarter 2022, all today from AB&Bev, our Mr. Michelle DuKaris, Chief Executive Officer, and Mr. Fernando Tannenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB&Bev's website at www.ab-inbev.com.

Speaker 2: and click on the Investors tab and the Reports and Results Center page. 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 open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your touch and click on turn phone.

Speaker 2: If at any point your question has been answered, you may remove yourself from the queue by pressing star 2.

Speaker 2: 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 AB&BAB's actual results and financial condition may differ, possibly materially.

Speaker 2: from the anticipated results and financial condition indicated in these forward-looking statements. For a discussion of some of the risks and important factors that could affect AB and Bev's future results, see risk factors in the company's latest annual report on Form 20F filed with the Security and Exchange Commission on the 18th of March 2022.

Speaker 2: A.B. and Bev assumes no obligation to update or revise any forward looking information provided during the conference call and it shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Michelle Duke Harris. Sir, you may begin. Thank you, Jesse, and welcome everyone to our full year 2022 or new school. It is a great pleasure to be speaking with you all today. Today for Nunder and I will take you through our full year and fourth quarter operating highlights.

Speaker 3: and provide you with an update on the progress we've made in executing our strategic priorities. After that, we will be happy to answer your questions. Let's start with all operating performance. We are very pleased with the continued momentum of our business and the strength of the beer category across our footprint.

Speaker 3: In both the first quarter and the full year 2022. For the full year, our top line is grouped by 11.2%, with volumes increasing by 2.3%, reaching a new open height. Rapping the product to a later, increased by 8.6%.

Speaker 3: Accelerating in the second half of the year, driven by revenue management initiatives and continued pre-newization. Driven by the consistent execution of our strategy and pipeline growth across all operating regions, our reported revenue is now $5.5 billion US dollars above year 19 pre-pondemic of QB in October in our race of financial agenda to encourage this and the impact of operate on that work that we are going to be building when we wait until storm not ??ly considered to adopt the next.

Speaker 3: with our volumes 5.8% ahead. I did that, included by 7.2% at the upper end of our medium-term growth ambition in 2022 outlook. Underline P.S. was $3.03.

Speaker 3: a 5.2% increase versus last year. As a result of all performance and strong free cash flow generation, growth debt decreased by $8.9 billion USD this year, leading to a net debt to a bid ratio of 3.51 times. Following our delivery in progress, the board has proposed a few years' dividend.

Speaker 3: of 75 euro cents per share, a 50% increase versus 20.1. In the first quarter, we delivered top-line growth of 10.2%. We've accelerated revenue per hecto-liter growth of 11.2%.

Speaker 3: driven by the implementation of price actions on going through theization and other revenue management initiatives. Our volume is declined by 0.6 percent.

Speaker 3: The reason primarily by the significant impact of COVID restrictions in China and a softer index in the US, which was impacted by the phasing of price increases and abnormally poor weather in December . We delivered and it did a growth of 7.6 percent in underlying EPS of 86 cents, a 12 cents increase versus quarter four, 21.

Speaker 3: Our diverse geographical footprint provides a new combination of growth and reliable cash flow generation, positioned as well to deliver superior value creation. In 2022, we delivered broad-based growth with a top-line increase in all five of our regions.

Speaker 3: and volume growth in over 60% of our markets. Now let's take you through the operational highlights for the year, from our key regions starting with North America. In the US, we continue to transform in pre-non-ISER port volume.

Speaker 3: Our business delivered another year of top-line growth in stable bidda, despite the elevated cost environment.

Speaker 3: Our above corporate folly continue to upperform the industry desire. And combined with our Vion beer brand, now represents over 40% of our revenue.

Speaker 3: While industry volumes in the first quarter were soft, we have seen private performance to start in 2023. We fear to date be an industry volume down 1%.

Speaker 3: In US dollars, say, is up 5%

Speaker 3: through the 12th of February , according to IRI. Our business in needle America continues to deliver outstanding results.

Speaker 3: In Mexico, we deliver another year of double digit top and bottom line growth with record high volumes continue to outperform the industry.

Speaker 3: Volume growth was broad-based. Across all segments of our portfolio, we found a both core beer brands growing over 20%. In the fourth quarter, we completed our oxo chain expansion with our portfolio now available in approximately 20,000 oxy stores nationwide.

Speaker 3: Looking ahead, we are focused on continuing to build the partnership and we are excited by the opportunity to activate our brands and gain our fair share across the network.

Speaker 3: In Colombia, our business deliver, double-visit top and high-single-visit bottom-line growth. Labed by the consistent implementation of our category expansion levels, the BR category continued to grow, gaining 80-based points share of total alcohol this year, and with 2022 marking the highest beer per test of consumption in over 25 years.

Speaker 3: Moving on to South America, our business in Brazil reached record high volumes in group top in bottom line by double digits. As we continue to expand our market share.

Speaker 3: Our performance this year was led by over 20% ratting growth of our premium and super premium brand. Now let's talk about EMEA. In Europe , we grew top-line by double digit and a bit by high single digit.

Speaker 3: Our portfolio continues to premiumize. We've over 55% of our revenue now coming from premium and a both premium brand. In South Africa, we delivered record-high volumes this year.

Speaker 3: The port folly continues to permeate. We've over 55% of our revenue now coming from premium and a both premium brand. In South Africa, we delivered record high volumes this year. Growing both.

Speaker 3: top and bottom line by double digit despite capacity constraint in the fourth quarter. And finally, a pack. In China, both the industry and our business were impacted by significant COVID-19 restrictions throughout the year, leading to a total revenue decline of 4.2 percent and a bit of decline of 10.8 percent. While 2022 was a disrupted year, underlined the demand outside of COVID-19 restrictions remained strong. As restrictions have eased, infection rates declined.

Speaker 3: We are optimistic about the industry recovered and returning to growth as chain-u-traffic in mobility normalizes in China. Now, I would like to share with you a few highlights of the progress across our sustainability priorities.

Speaker 3: Our priorities are centered around the BF category, which is inclusive, natural and local. With this priorities embedded into our commercial strategy, we can create value and share prosperity for our business, our communities and our planet. We continue to make progress across our priorities, highlights include investing over $700 million US dollars since 2016 in social-normates market campaigns, promoting smart drinking and moderation. Reducing is called one in two.

Speaker 3: absolute emissions by 39% in improving water efficiency by 14% versus our 20-17 days life. We are working with nearly 24,000 farmers in our direct sourcing programs to research, technology, and hands on support to help SKU connect and financially power them. Additionally, we progress our circular packaging goal. We have 77% of our products now in packaging that is repelable or made for a majority recycled content.

Speaker 3: move on to our strategic pillars.

Speaker 3: strategic pillars. Let's start with pillar number one.

Speaker 3: Lead and grow the Cative Oil. This year, our volume reaches all-time high with growth across more than 60% of our market.

Speaker 3: This is a direct result of our commitment to lead and grow the category by investing in our brand, innovation and category expansion levers. Our total volumes are now 5.8% ahead of pre-pondent levels. Our above core beer brand has landed growth.

Speaker 3: increasing almost 17% versus 2019. With Corona, the start of former growing volumes by 42% outside of Mexico. Despite the challenge of COVID-19, we invested an average of $7 billion US per year over the last four years.

Speaker 3: On a current neutral comparable basis, in 2022 we invested more than $400 million in sales and marketing versus 2019. The consistent investments combined with our digital capability and increasing the effectiveness is driving the power of upward volume and organic growth of our business. In 2022 we are naming...

Speaker 3: creative marketer of the year by KAN. The most effective marketer worldwide at the FI Awards, and the number one advertiser in the creative 100 by the world advertisement research center. Once again, congratulations to our team and partner.

Speaker 3: for this truly remarkable achievements. We continue to execute on our five levers to drive categor expansion and deliver a strong year of consistent and profitable top line growth.

Speaker 3: We are making the category more inclusive, offering superior core propositions, developing consumption occasions, and expanding our premium and beyond-beer portfolios. Our global brands continue to scale in our driving premiumization across our markets. The combined revenues of Corona, Stellar-to-A and Budweiser, grew by 8.9% outside of the brands for markets, and left by Corona, which grew by 5.6%.

Speaker 3: But the rise of growth of 2.5% outside of the US was significantly impacted by the COVID-19 restrictions in China, the brand largest market, including China, the brand grew revenue by 12.6% in 2022. Emnovation continued to support categorical expansion across each of the five pillars, with invovations contributing approximately $5 billion in that revenue in 2022.

Speaker 3: From expanding our non-alcoholic beer portfolio by launching Corona-cero in 11 countries, to growing our beyond-buret portfolio by scaling to water and neutral within the U.S., our focus remains on driving sustainable long-term goals. Now let's turn to our second strategic pillar, digitize and monetize our ecosystem. This continues to accelerate usage and reach, capturing $32 billion US dollars in Gen. Z. this year, a 60% increase year over year reaching 3.1 million monthly active users. Since this began its rollout in 2019,

Speaker 3: Our initial focus market have strengthened customer engagement with the weighted average net promoter score improving to positive 66 as of year-end 2022. In 15 of the 20 markets where business life, our customers are also able to purchase third-party products to be market place. Customer adoption is increasing with 56% of these customers now also be a marketplace bias. In 2022, these marketplace generated approximately $850 million in revenue. As an example of how business is improving our business and enabling us to be a better partner to our customers.

Speaker 3: Let's take a look at one of our countries, Brazil. This is enabling us to be closer to our customers and solve their most pressing pain points.

Speaker 3: Since there were a lot of bees in 2019, we have expanded our customer-based in Brazil by over 250,000 Fox. Increased the total number of annual delivers by 3 million delivers, and rather the availability of our portfolio. In most importantly, our relationship with our customers has included significant.

Speaker 3: with MPS score increasing by 24 points. Digital transformation is a superior of our strategy and has enabled our affiliated growth in Brazil. Since 2019, the BR category has gained a share of total alcohol.

Speaker 3: with beer market share expanded and our beer volume grew by 15%. One key warning from BZF when our customers grow, we grow. Now let's talk about how we are strengthening our relationship with our consumers.

Speaker 3: Our digital, digital, digital, and digital products that are delivery, to DA, in perfect drafts are now available in 17 markets, in generated over $460,000 in revenue.

Speaker 3: in 69 million orders this year. That is 69 million opportunities to better understand our consumers and their construction

Speaker 3: The FIFO World Cup offered an exciting opportunity for our digital DTC platforms as we launched the biggest digital campaign in our history. Our DTC activation yielded impressive results, increasing daily average orders during FIFO World Cup in attracting nearly half million new consumers to our platforms.

Speaker 3: With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business, Fernando, over to you. Thank you, Michel. Good morning. Good afternoon, everyone. We aim to maximize value by focusing on three areas.

Speaker 3: one, optimize the resource allocation, two, robust risk management, and three efficient capital If we respect to capital location, we are focused on maximizing long-term value creation by dynamically balancing our priorities.

Speaker 3: We continue to invest in organic growth to support our strategy to live and grow the category and digitize and monetize our ecosystem. The excess cash generated by our business is then dynamically allocated to our other three capital allocation priorities.

Speaker 3: the leveraging, the Lactiv MMA, and return of capital to shareholders. Investing the organic growth of our business is our number one priority and we have no shortage of investment opportunities. In addition to sales and marketing, which as Michel mentioned earlier, has averaged around seven billion US dollars per year since 2019.

Speaker 3: We also continue to invest in our facilities and capabilities, allocating $4.8 billion US dollars in net capex in 2022. Over 50% of our capex expand, it to support capacity expansion, new capability, digital transformation, and other growth initiatives. In 2021. 2021.

Speaker 3: We invested a combined of 11.7 billion US dollars in sales and marketing and net capex. And since 2019, we have invested over 45 billion US dollars to full growth. As you can see on his like 33.

Speaker 3: Two times net debt with data remains the point at which we maximize value. Though approximately 90% of the benefits from the leveraging can be captured as we approach three times net debt with data. This year we continue to deliver a strong free cash flow generating approximately 8.5 billion US dollars. Graud best.

Speaker 3: We do this by $8.9 billion US dollars to reach $79.9 billion. As a result, we have made significant progress on our delivery journey with our net debt to a bit of ratio reaching $3.51. Our debt maturity profile remains well distributed with no bond maturity in 2023 and no relevant medium-term refinancing needs. If you look at our debt maturity profile, we have $3.0 billion US dollars worth of bond maturing through 2025.

Speaker 3: and more than sufficient liquidity today to redeem all of these bonds. Our bond portfolio has an average pre-text coupon of around 4% and a weighted average maturity profile of approximately 15 years. Moreover, our debt portfolio does not have any financial covenant and it is comprised of a variety of currencies diversifying our effects risk. 95% of our bonds have a fixed rate.

Speaker 3: insulated from interest rateable activities and inflation. And now, let me take you through the drivers of our underlying ETS disease. In 2022, we grew underlying ETS by 5.2% versus last year, delivering 3 US dollars to a cent per share. This increase was primarily driven by nominal-ebited growth, which accounted for a 29 cents per share increase.

Speaker 3: We continue to optimize our business, reducing net interest and income taxes expenses, mostly offsetting headwinds in other line items. To simplify our disclosure, as from January 1, 2023, market to market on the river teeth related to the hedging of our share-based payment programs, we will be reporting in the no-one-er-line net-finance line. As a result, we will discontinue disclosing normalized DPS as a separate metric.

Speaker 3: As we continue to optimize our business and bring our dynamic capital location priority to action, in 2022 we invested $11.7 billion in sales and marketing and net capex to drive organic growth. We reduced it growth by $8.9 billion in rich and net leverage of $3.51 times. As a result of our continued momentum and consistent delivery in progress, the board has proposed an increase of the full year dividend by 50% versus 2021.

Speaker 3: to 75 euro cents for share. With that, I would like to hand it back to Michelle for some final comment before we start our Q&A session. Michelle? Thanks for an answer. Allowments take a few minutes to recap my key takeaways from the year and how we are prepared to continue to meet the moment in 2023. We lead a big, profitable and growing category.

Speaker 3: Be it is resilient and is gaining share of throat globally. We made significant progress in 2022, executing across each of our three strategic pillars. Believe in by the increasing strength of our brand portfolio, we delivered all-time high volume and gained a share across key markets. We made important strategic choices in revenue management.

Speaker 3: driving accelerated net revenue per liter growth of 11.2% in the fourth quarter. We progress our digital transformation. We have 63% of our revenues now digital. 56% of these customers are now also business marketplace buyers and our digital DTC products who feel more than 69 million orders.

Speaker 3: We delivered another year of strong freakish flow, an underlying TS growth of 5.2%.

Speaker 3: As a result, the ABA Board has proposed a full year dividend of 75 euro cents per share. Looking ahead to 2023, we are focused on the relentless execution of our strategy and driving the momentum of our business.

Speaker 3: We have an industry-leading portfolio of brands across all price points, an advantage geographic footprint, and superior digital products that are bringing us closer and narrower to our customers and consumers. We are well positioned to meet the moment in 2023 and to create a future of more years. With that, I will hand it back to Jeff Fee for the Q&A.

Speaker 2: Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. Again, if you have a question or comment, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. We do ask that while you pose your question, you pick up your hands up to provide optimal sound quality.

Speaker 3: Thank you our first question is coming from Simon Hills with City. Please proceed with your question. Thank you. I'm Michelle Heisenando. I suppose I've proposed a couple of months. My first Michelle is really on Mexico. Or did you just talk a little bit more about what's been happening there? Clearly two full volumes were a little bit weaker than the market expected. Maybe a little bit slower than we saw through the first nine months of your year. But perhaps more importantly, could you talk about how you see that market developing as we head into 2023 and you get full benefit of the Oxo Roll out into the North? And perhaps associated with that, what are you doing in Northern Oxo and sports to make sure you get your fair share of the consumer of.

think we have the great hearing Mexico volumes.

positive, shared positive, top and bottom line double digits. We talked a little bit about this, bad weather in the quarter four in North America. And the reality is that this expanded to Mexico as well, even though we've been talking a little bit to less about that, but was extremely cold, including some of the Caribbean countries where we do have operations. We think that as we look at desire.

things are more normal and we expect to see how the quarter one is going to be and we'll talk more as we announce results for quarter one later. Oxo, we completed the last wave of our expansion and we could not be more excited now with the opportunities to activate our brands across Oxo, pre-minize the portfolio and get our share, fair share across the network. So I think that continues to be a great opportunity as Mexico is a relevant country, Oxo expands and we're going to be expanding our portfolio together with them. In the US I think that we saw this one-off complicated quarter on quarter four. Many things there from facing price increase, the fact of the two price increase of the year in one quarter and a really really complicated weather at the back end of the quarter. As we are now with couple of weeks under the belt.

into January and February . The published numbers that are there, IRI numbers, they point out for volumes, give or take 1% down, revenues close to 5% up, and you see this very consistently.

across each and every week. Of course, there is phasing of Super Bowl, which is an important part of the industry in the first quarter of the year, but working well so far. Consumer and demand resilient. We say that different than other categories, beer doesn't have penetration on private labels. So we don't see what other categories see in terms of trade down. What we see is consumer changing a little bit channels and changing a little bit Moreover we have a quick package.

So people buy more in larger formats Both in terms of the chains supermarkets and the packs and people Stay more at home. So penetration and consumption at home is being bigger Which in a way is very good for beer because beer has high a share of throat in home and out of home And our brands continues to perform well. We see strength in Michael Volta a strength in bush light. We see better performance so far in some of our core brands and our beyond beer portfolio performance very well.

Thank you. Our next question comes from Mitch Collette with Deutsche Bank. Please proceed with your question. Thanks. Hi Michelle. Hi Sena. And I'd like to ask a question on bees please. I think you're saying the release that 40% of your revenue in China is now via digital channels or at least it was by December . And I think at the Q3 stage that was 15% so pretty big uplift. You talked about China and the US being part of the third wave for the bees roll out due to the wholesaler model there. So can you comment on the benefits of that digital roll out and what it brings to China and how we might think about that as it goes into other wholesaler led markets. Hi Mitch. Thank you for the question. Thank you.

And it's very interesting because I just came back from a trip in China. I was there in the region for one week and one of the things that I spent time looking at and discussing with the team was beef. And you are right, like beef is the mark, China is one of the markets where beef was being built for a different role to market. And because of the difference on the role to market is this third wave in which the celebration is not the same as when we have direct distribution. I was super glad to see that the product is very good.

It is scaling up very fast, usage by the retailers is very, very good and they are very happy the NPS is high. And one extra point coming from these in China is a little bit complicated to explain that or try to put this in a simple way in China because of the three-tier system of China that can be a five-tier system is very complicated for CPGs to trace product and to have visibility throughout the market.

because we are integrating very well QR codes, the whole sailors and bees as a tool. We are doing a lot of geolocation. We are getting a unbelievable array of visibility through the network and it can really now get even when we have more tiers in the remote market, the full visibility of the sales on a POC by POC basis. And of course by doing that we are integrating revenue management, promotional activities, our whole sailor and logistics network. So I think that bees will continue to scale very fast in China. Both wholesalers and retailers are very happy with the product and what we bring in terms of better data, quality data and visibility. And I think that the effects in China we have pretty similar to other markets. We will see acceleration sales, better trade programs, better integration, we have more marketing campaigns and more efficient. It is very effective and helps us big time.

Very interesting. Thank you. Our next question comes from Brett Cooper with Consumer Edge. Please proceed with your question. Hi, good morning. Good afternoon. I wanted to dig into your approach to managing the portfolio with respect to balancing the need to support the core versus innovation. And more specifically, innovations and more traditional beer like Pramadupal Baltic have been successful, which we can see in the innovation contribution. But expansion and beyond beer has proven, I think, a bit harder with the company being at the strategy of innovating and extending for a period of time. I'm hoping you could share learning from your work over the last several years and maybe how you balance efforts and investments on the core versus innovation. And if that process has changed at all. Thanks.

Okay, thank you for the question. I think that the first point is really matter of end instead of work. So I think that we need to be able to invest in the court and renovate, create excitement around our court brands. As you said, best class work being done in Brazil for Bramaduple Malt, if you think about causing Korea incredible results, Victoria and Modeling Mexico doing extremely well. At the same time, because we know that we have penetration opportunity and we can gather more consumers and be present in more occasions.

We need to continue to innovate in this beyond-bearing space that offers us incredible opportunities for growth, especially with female consumers and sources a lot from liquor and from wine.

One of the key learnings I can talk about this for a long time, but I'll try to get to you the biggest learning that we had so far because of the timing of the other questions that we'd like to talk about is really that when we create...

One of the key learnings I can talk about this for a long time, but I'll try to get to you the biggest learning that we had so far because of the time and the other questions that we'd like to talk about is really that when we create new brands.

that are catered to this consumer and to the occasions that we want to gain share, they work better in the long term. They start is lower than when you extend brands from our car brands, but they build a much more sustainable model. And the learns that we've been having on that, they go from Bruto Fruit in Africa to Beats in Brazil to what we've been seeing with that water in neutral in North America, from Canada and the US. And those brands, they are champions of the future that we are investing consistently to build. It's a very, very good way to expand the portfolio. It's aggressive because they go outside of our core and they interact with new consumers, but it's much more sustainable. And we've been doing things both ways when we need to do something fast using our car brands extension lines, but we've been doing also creating new to the world brands, and they are doing very well. And this is true in the physical world.

I just gave you examples neutral brutal fruit and is even more true in the digital space. For example, what we are doing is Tadanau in the direct consumer ecosystem is a multi-country or a very boring global brand. We are in 11 countries, expanding very quickly is a very powerful value proposition.

to consumers, a brand that has been built at the fast stellar pace.

And we are very happy with both examples, physical but also digital products that we are creating. Our next question is coming from the line of Trevor Sterling with Bernstein. Please proceed with your question. Hello, Michelle and Fernando. Two questions on my side, please. The first one, Michelle, you highlighted that volumes are up almost 6% compared to 2019. I think by my calculations, revenues are up 24%. But margins are done. A bit darn margins done about 600 bits.

How much of that do you think you can get back? I appreciate there have been input cost pressures, transactional effects, negative operating leverage from COVID, but how much is it realistic to get back and over what time frame, especially since you guess implicitly, you expect more margin compression in 2024. And the second question, maybe one more for Fernando, the flying EPS is up 5%, the dividend is up 50%, is that purely a function of where we are on the deleveraging curve? Hey Trevor, good afternoon, let me take the first one here and Fernando will take the second. We always talk about this and I always start the conversation around margins with two real statements. The first one is that we love our margins. We really...

like the fact that we have high margins because this brings us a lot of flexibility to invest as well as to navigate when situations are tougher. And the second one is that our margins, they exist for structural reasons. The power of brands that we have, premium brands that they command higher margins, they are a strength of positions that we have in key markets and the way that we operate our business in a very efficient way. And the F, I acknowledge what you said, the margins since 1919. I think that we also saw a huge dislocation in terms of costs because of supply disruptions, because the way that things happened, but also because of inflation. That got worse with the situation last year in Europe and commodities going even higher. And we've been balancing as much as we can, our ability to price correctly and having the category, category penetration in the growth of the category being prioritized. I think that.

We talked about this before as we look at 2023 with the ability that we have today the cost Calation is big but is smaller than what we saw in 2022 and on a percentage basis is definitely smaller and We continue to bring our prices up So what we did in the quarter four was a very important wave of prices and revenue management that will yield for us good benefits this year and I think that things will accommodate with time I can't precisely tell you when and how much in a time frame but we are very focused and continues to drive the parts or brands charge the premium price that they deserve and be efficient in the way that we do walktives in the company

So, therefore, we expect our margins to come back. And, hi, Trevor, on your second question on dividends, on EPS, on capital structure, I always like to take one step back and look at our business. We have a very good business that generates a large amount of cash flow in a very sustainable basis, so it's a very good business that constitutes an generate cash. Having said that, once we have to access cash for the business, and just to quote a number, the free cash flow for 2022 was $8.5 billion, we need to decide what is the best wage to locate. And that's what we call dynamically locating our capital. We know that the leveraging creates value, and we know that 90% of the value of the leveraging happens when you get towards three times. So, why we were at a higher leverage, we focus most of the F's.

marketing. We're hearing from a range of consumer companies how they're looking to increase their marketing standards in 2023. How do you think about that? And then the second one is when you look at 23, which regions do you feel most bullish about in terms of volume development? Thank you.

Hi, Pinar. Thank you for the questions, Michelle here. On the first one, you know that we don't give guidance by line. And we showed during the webcast here that we continue to invest close to $7 billion across all years since 2019. And there is a growth when you get 2019 to 2022 of roughly $400 million in organic terms.

And our plans are to continue to invest behind this brand. They are great brands. We achieved the last year at all time, high power of our portfolio is the measurement that we have for favorite preference. Whatever different companies call, we call power. And those brands, they deserve good investments because they drive the growth that we want to have for the company today. And in this journey from inorganic to organic growth, we will be achieved by the quality of the sustainable growth of our brands.

But I think that more important than that is increasing investments with effectiveness. And our creative quality is as good as never been recognized by Ken, recognized by F. We won't only create it, but also effectiveness. And as we expand our digital products both beef and the D2C, we have this unique opportunity to combine data, to do all-to-all, to activate campaigns in large scale, as we did, for example, during FIFA World Cup, in a very effective way. So we are not only growing the amount of dollars that we are investing the brands.

But we have swapping these dollars much better than before with higher otherwise. And on the second question, I think that this is a easy from our side to answer. I think that the market that we are more excited for the moment is China. And in a nutshell, China was incredibly disrupted last year by a series of lockdowns, smoke and clothes, and people really losing opportunities to be social and to use our products. And based on what I saw on this trip last week in the market, I visited several places. I could feel like restaurants with two hours waiting list on a giving Thursday. I saw nightlife pocks full of people and consumption resuming very quickly. I think that the market that we are more excited for 2023 is getting China to its full potential.

and giving our premium presence the relevant software brands there and how sizable China is. That can be a nice add-on to build on the momentum that we have across the globe. Thank you so much. Thank you. Our next question is coming from the line of Rob Ahtenstein with Evercore ISI. Please proceed with your question. Great. Thank you very much and congratulations on the tremendous progress de-leveraging and the dividend increase.

Can you kind of go back to a prior question? Can you give us maybe a little bit more granularity on the major price increases that you took in Q4 in the major markets? Any as much detail as possible would be great. And your sense of how well those are sticking or competitors following. I mean, in most cases, you tend to lead. So that's an important dynamic. And then I have a follow-up question for Fernando. Hey, Robert, good morning. Thanks for the question.

I think that you already know that we don't disclose much of this price by market and with the tails, but I think that the best way to answer this question is thinking about our policy of moving prices with inflation. And inflation, as you know, was as likely different on a market by market, but growing everywhere. And we had dear, dear total, not only the I lagging behind inflation throughout most of the year, but catching up towards the end of the year. So I think that perhaps more interesting is to think about the positive carryover.

that the price will have for 2023, while 8% give or take during 2022 was above 11% in the quarter four. And we know that inflation is pointing down across most of the markets, but it's still on a high level. So I think that we have a very good carryover. We were able to move the prices globally according to our plan and reorganize the plan as inflation was above what was originally planted.

We see a majority of the markets holding well and we know that beer is a resilient category. It's not immune to inflation and everything that happens, but it's very resilient. I think that through all the years, as you see, salaries increasing and each and every country has a different agenda for that right from March, April , May in some of the Latin American countries. The Latin countries to more, middle of the year, in North America, in China, we will see them purchase power.

coming back and I think that the balance of volume and price would be very positive. On a relatively basis, historically we see that the relatively is holding and in this very high inflation, high input costs, the relatively attempts to be good across the markets, we monitor to reduce of course because we have to balance the prices that we have, the penetration of our brands, and how the category is responding on the market to market. To order to call more details, I hope that my answer was helpful to you and I'm sure that we'll be talking more about that as we go to quarter one.

to part 2 and then with much more that there is any information in our hands. Great, thank you. And Fernando, I just want to push you a little bit on the capital allocation and this idea of the dynamic capital allocation. As you get to three turns and head towards, I think, the long term goal of two turns, it's striking to me that where the stock is valued today.

is on a multiple that is well below transactions that everybody has done in the beer industry for the slowest growing businesses. And if you even put a multiple on your consensus estimates for EBITDAF for 24 at the lowest valued kind of international transactions, you get a stock price of $100 US or more. So it just seems remarkably cheap. I know you expect to go higher as you deliver, but if this disconnect continues, how do you think about the possibility of buying back stock when you get to three turns or less? And that's something you haven't historically done, but to new world and what to get your thoughts on that. Hi Rob, thanks. It's a good question, a long question, but a good question.

and what is the main goal of the dynamic capital location? The main goal is to create value. That's where aiming for at the end of the day. And in different moments of time, you are going to wait all the benefits of each one of the options. You mentioned buybacks. You are going to, of course, you have your model to see the value of the idea I share. We have our own model. We are going to always see the increased KARR versus the AR of the leveraging, versus the AR of the individence, versus the AR of any M&A projects. And we are going to look at every moment in time which composition is the one that maximizes value for the AR. So I think I don't have much more to share because I cannot give any guidance. But you can be assured that in any given moment in time, we are going to be assessing all the different alternatives and the ones that maximize it. Thank you. Thank you. Thank you. The next question is coming from the line of Olivier Nicolai.

and what's happening the last

is beer responding much better. The biggest loser is wine. Spirit continue to do well. But the majority of the growth is in ready-to-drinks. And in ready-to-drinks, actually, we are leaving the pack. And we are much better positioned to grow the ready-to-drinks based on the footprint that we have, the network that we have. And this is part of our portfolio renovation. But that's why it's so important for us to get premium correct, to get the Kala Boltra to continue to expand and having new-through cut water and the other ready-to-drinks propositions that we have to grow.

I think that when you think about the main causes for its periods to be performing well in the U.S. has a lot to do with availability. So, several propositions in state, things that increase the availability. And for some people, questioning how big this can be and all the availability that was created, this is the correct thing. And the second point we see throughout the years, more on the affordable cheap side when you compare its periods prices in the U.S. versus any other market globally, which is something that is interesting, not to say anything different, it's quite affordable.

But it's good to see that in the last two weeks and when you look one, two, three years compounded, the year is performing better than was performing before. Year-to-date is gaining, share of value and gain, share of growth. And I think that innovation, quality of the products and the right alignment with the consumer long-term are the answer. Yet, a lot of work to be done. And we'll leave here on to our second question on other financial results.

Do you mention a Christian expenses? This is one that is more predictable, so we can give the outlook and provide the range. On the rest of other financial results, the most relevant line is the carry cost of the hedges. And carry cost of the hedges are a function of interest rate differential between different countries.

And this one can float. That's why we don't provide too much of an outlook. But if you look at our major exposures, we have to have available on our financial statements. And if you understand the carry cost differential, then you can make an educated guess. But acknowledging that interest rates may float throughout the year, and the number may be somewhat different. I'll do my best. Thank you very much. Thank you. Thank you. Our final question will come from the line of Lawrence Wyatt with Barclays. Please proceed with your question. Hi Michelle. Hi, Fernando. Thanks very much for the question as well, please. Firstly, we saw a winter world cup in much of the Northern Hemisphere. But of course it was the summer world cup for much of the Southern Hemisphere. We didn't hear too much about any benefits from that over the last few months and in the last quarter. Many geographies that took a real benefit to do anything in Brazil or South.

uh... results of course you can imagine that argentina had uh... extended party that never ended went through the fember and parts of the generate and some other countries that they run short and the interest was is likely smaller but i think that the benefit was

great for the brands, so Budweiser had a health run and very strong results in brand equity across the globe with the campaigns that we've run. The interest for this sport all-time high and huge excitement building up now for the next event that's going to be Canada, US and Mexico. We activated our brand especially digitally. We gained 500 million.

consumers more. So there was an interesting way of seeing the power of integration of brand campaigns and our digital products. And we had a great volume of food wiser in quarter four. The exception was China once again because of the lockdowns, very relevant food wiser market for the food wiser. So we saw that the whole food wiser was not good but outside China very positive, especially in the places where we heavily activated the campaign. And a lot of Sonya on her question on input costs.

If it's too early for us to start looking at this metric, we normally had 12 months out, so we are just starting to look at 2024. Probably more as the year goes by, we're going to have a more relevant information that is more useful for us to start thinking about. So, to sum to make any comment on that.

too early for us to start looking at this metric. We normally had 12 months out, so we are just starting to look at 2024. Probably more as the year goes by, we're going to have a more relevant or information that is more useful for us to start thinking about. So, to sum, to make any comment on that. Okay, then. Thank you very much.

Thank you. This was the final question. If your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Mr. Michelle Dukaris for closing remarks. Thank you, Jesse. And thank you, everyone, for participating for the questions. I hope you are all doing well. And I wish you a great 2023. And we will get back to you as we close part of it. Thank you. Have a good one. Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.