Q2 2023 Anheuser-Busch Inbev SA Earnings Call

August 3, 2023

To access the slides accompanying today's call. Please visit Avion pubs website at Www Dot E D Dash Inbev dot com 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.

Operator: Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com 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 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. If you should require operator assistance, please press star zero. Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements.

Speaker 1: and bomb, T-finish.

Speaker 1: To access the slides accompanying today's call, please visit AB&Bes website at www.ab-inbev.com and click on the Investors tab and the Reports and Results Center page. Today's webcast will be of—

At this time, all participants have been placed in a listen only mode and the floor will be opened for your questions. Following the presentation.

Speaker 1: At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presence.

If he would like to ask a question at that time. Please press star one on your Touchtone phone.

Speaker 1: If you would like to ask a question at that time, please press star 1 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.

Speaker 1: If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. If you should require operator assist.

If you should require operator assistance, please press star zero.

Some of the information provided during the conference call may contain statements of future expectations and other forward looking statements.

Speaker 1: Some of the information provided during the conference call may contain statements of future expectations and other forward.

These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties.

Speaker 1: As expectations are based on management's current views on assumptions and involve known and unknown risks and a

Operator: These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ, possibly materially, 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 InBev's future results, see risk factors in the company's latest annual report on Form 20-F filed with the Securities and Exchange Commission on 17 March 2023. AB InBev assumes no obligation to update or revise any forward-looking information provided during the conference call and 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. Michel Doukeris. Sir, you may begin.

It is possible that AB inbev actual results and financial condition may differ possibly materially from the anticipated results and financial condition indicated in these forward looking statements.

Speaker 1: Possible that AB B invves's actual results in financial condition may differ possibly materially from the anticipated results in financial condition indicated in.

For a discussion of some of the risks and important factors that could affect AB inbev future results see risk factors in the Companys latest annual report on form 20-F filed with the Securities and Exchange Commission on the 17th of March 2023.

Speaker 1: or a discussion of some of the risks and important factors that could affect AB and Beds.

Speaker 1: risk factors in the company's latest annual report on Form 20F filed with the Security? forwards for the

A b Inbev assumes no obligation to update or revise any forward looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information.

Speaker 1: The B&B ev assumes no obligation to update or revise any forward looking information provided during the conference call, and shall not be liable for any action taken in reliance upon such information. It is them.

It is now my pleasure to turn the floor over to Mr. Michel do terrorists, Sir you may begin.

Thank you Jessie and welcome everyone to our second quarter 2023 earnings call. It is a great pleasure to be speaking with you all today.

Michel Doukeris: Thank you, Jesse, and welcome everyone to our Q2 2023 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our Q2 operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with our operating performance. Our global momentum continued this quarter, although it was partially offset by the performance of our US business. We delivered revenue growth of 7.2%. Our net revenue per hectoliter increased 9% as a result of pricing actions, ongoing premiumization, and other revenue management initiatives. Total volumes declined by 1.4% as growth in the majority of our markets was offset by volume decline in the US.

Michel Doukeris: Thank you, Jess, and welcome everyone to our Q2 2023 earnings call. It is a great pleasure to be speaking with you all today. Today, Fernando and I will take you through our Q2 operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions. Let's start with our operating performance. Our global momentum continued this quarter, although it was partially offset by the performance of our US business. We delivered revenue growth of 7.2%. Our net revenue per hectoliter increased 9% as a result of pricing actions, ongoing premiumization, and other revenue management initiatives. Total volumes declined by 1.4% as growth in the majority of our markets was offset by volume decline in the US.

Speaker 2: Thank you, Jesse, and welcome everyone to our second quarter, 2023, Ernie Skull. It is a great pleasure to be speaking with you all today.

To date for the London, I will take you through our second quarter operating highlights and provide you with an update on the progress we have made in executing our strategic priorities.

Speaker 2: Today, Fernanda and I will take you through our second quarter operating highlights and provide you with an update on the progress we have made in executing our strategic priorities. After that, we'll be happy to answer your questions.

After that we'll be happy to answer your questions.

Let's start with forward operating performance.

Our global momentum continued this quarter, although was partially offset by the performance of our U S business we.

Speaker 2: Our global momentum continues this quarter, although was partially set by the performance of our US business.

We delivered revenue growth of seven 2%.

Speaker 2: We delivered revenue growth of 7.2%.

Our net revenue per hectoliter increase of 9% as a result of pricing actions ongoing <unk> and other revenue management initiatives.

Speaker 2: Our net revenue per hecto litter increased at 9%. As a result of pricing actions, ongoing implementation, and other revenue management initiatives. Total volumes declining by...

So volumes declining by one 4%.

<unk> growth in the majority of the Florida markets was offset by volume declines in the U S.

Speaker 2: as growth in the majority of the foreign markets was offset by volume declining the US.

EBITDA increased by 5% and reached $4 9 billion U S dollars.

Speaker 2: EBITDA, increased by 5% and reached $4.9 billion.

Michel Doukeris: EBITDA increased by 5% and reached $4.9 billion. Underlying EPS was $0.72. While this quarter was not without challenge, the strength of our brand portfolio, global footprint, and our focus on disciplined resource allocation continues to enable us to invest for the long term while delivering profitable growth. We delivered broad-based growth this quarter with double-digit top line increases in 4 of our 5 operating regions. Revenue increased in more than 85% of our markets, with volume growth in over 50%. Our diverse geographic footprint positions us well to deliver superior long-term value creation. Now, I will take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America.

Underlying EPS was <unk> 72 U S dollar.

Speaker 2: Underline P.F. was $72.00.

While this quarter was not without challenge the strength of our brand portfolio.

Speaker 2: Why would this quarter was not without challenge? The strength of our brand portfolio, global footprint, and our focus on discipline resource allocation, continues to enable us to invest for the long term, why are delivering profitable growth?

Global footprint and our focus on disciplined resource of location.

<unk> is to enable us to invest for the long term, while delivering profitable growth.

We delivered broad based growth this quarter with double digit top line increases in four of our five operating regions.

Speaker 2: We delivered broad-based growth squarters, with double digit top-line increases in four of our five operating regions.

Revenue increases in more than 85% of our markets with volume growth in over 50%.

Speaker 2: Revenue increases in more than 85% of our markets. We have volume growth in over 50%.

Our diverse geographic footprint positions us well to deliver superior long term value creation.

Speaker 2: Our diverse geographical print positions as well to deliver superior long-term value creation.

Now I will take a few minutes to walk you through the operational highlights for the quarter from our key regions, starting with North America.

Speaker 2: Now, I will take a few minutes to walk you through the operational highlights for the quarter from our key regions. Starting with North America.

In the U S. The beer industry remains resilient.

Speaker 2: In the US, the beer industry remains resilient, delivering revenue growth of 2.3% and a quarter, and with beer gained share of value of total alcohol in the first half of 2020.

Michel Doukeris: In the US, the beer industry remained resilient, delivering revenue growth of 2.3% this quarter, and with beer gaining share of value of total alcohol in H1 2023. Our revenues declined by 10.5% and STR volumes by 14%, with performance impacted by the decline of the Bud Light brand. With respect to Bud Light brand performance, we have actively engaged with over 170,000 consumers since April, and there are a few clear insights. First, most consumers surveyed are favorable towards the Bud Light brand, and approximately 80% are favorable or neutral. The consumer will always be at the center of everything we do. All of us at ABI deeply care about and respect all our consumers. Second, regardless of favorability, our consumers across all sentiment groups have 3 points of feedback in common.

Levering revenue growth of two 3% this quarter and we should be gaining share of value of total alcohol in the first half of 2023.

Our revenues declined by 10, 5%.

Speaker 2: Our revenues declined by 10.5%. NSTR volumes by 14%. We're performance impacted by the decline of the blood-like brand.

And STR volumes by 14% with performance impacted by the decline of the Bud light brand.

With respect to Bud light brand performance, we have actively engaged with over 170000 consumers since April and there are a few clearing sites.

Speaker 2: We've respect to Bud Light brand performance. We have actively engaged with over 170,000 consumers in April . And there are a few clear insights.

First most consumers surveyed are favorable towards the Bud light brand and approximately 80% of favorable or neutral.

Speaker 2: First, most consumer survey are favorable tours of a life brand and approximately 80% are favorable or new.

The consumer we always be at the center of everything we do.

Speaker 2: The consumer will always be at the center of everything we do.

All of us at Abi deeply care about and respect all of our consumers.

Speaker 2: All of us at the BI, duplicate about and respect all our consumers.

Second regardless of favor ability.

Speaker 2: Regardless of favorite, our consumers across all sentiment groups have three points of feedback in common.

Our consumers across all sentiment groups have three points of feedback <unk> com.

One they want to enjoy that beer without the debate.

Speaker 2: One, they want to enjoy their beer without a debate.

Michel Doukeris: One, they want to enjoy their beer without a debate. Two, they want Bud Light to focus on beer. Three, they want Bud Light to concentrate on the platforms that all consumers love, such as NFL, Folds of Honor, and music. We are taking the feedback and working hard to earn our consumers' business every day across the world. While our total beer industry share declined by 520 basis points this quarter to 36.9%, it has been stable since the last week of April through the end of June. US EBITDA declined by 28.2% this quarter, with approximately two-thirds driven by market share performance and one-third driven by productivity loss and the long-term strategic choices we made to increase sales and market investments in our brands and provide support to our wholesaler partners.

Two they want Bud light to focus on beer.

Speaker 2: True, they want Bud Light to focus on beer.

Three they want Bud light to concentrate on the platforms that all consumers love such as NFL folds of honor and music.

Speaker 2: 3. They want Bud Light to concentrate on the platforms that all consumers love, such as NFL, Photophone, and Mews.

We are taking the feedback and working hard towards consumers business every day across the world.

Speaker 2: We are taking the feedback and working hard to earn our consumers business every day across the world.

While our total beer industry share declined by 520 bps. This quarter to 36, 9%. It has been stable since the last week of April through the end of June .

Speaker 2: Why our total beer industry share the climate by 520 dips, the squatter to 36.9%. It has been stable since the last week of April through the end of June .

U S. EBITDA declined by 28, 2% this quarter with approximately two thirds driven by market share performance.

Speaker 2: US bid that the climate by 28.2% is quarter. We've approximately two thirds, the reason by market share performance, and one third, the reason by productivity loss and the long term strategic choices we made to increase sales and market investments in our brands and provide support to our wholesaler partners.

And one third driven by productivity loss in the long term strategic choices, we made to increase sales and marketing investments in our brands and provide support to our wholesaler partners.

As we move forward in the U S. We are focused on what we do best.

Speaker 2: As we move forward in the U.S., we are focused on what we do best. Brewing, great quality beer, actively engaging with our consumers, supporting our partners, and positively impacting the communities that we serve.

Michel Doukeris: As we move forward in the US, we are focused on what we do best, brewing great quality beer. Actively engaging with our consumers, supporting our partners, and positively impacting the communities that we serve. Now, moving to our largest region, Middle Americas, which delivered margin expansion and another quarter of growth. In Mexico, we continue to outperform the industry, delivering double-digit top and bottom line growth. Our above-core portfolio grew revenue by mid-teens, led by the strong performance of Modelo Especial. We continue to progress our digital DTC initiatives with our DTC platform, TaDa, now operating in over 60 major cities and fulfilling on average, over 300,000 orders per month. In short, Mexico continues to execute effectively across all three pillars of our strategy to drive consistent performance.

Moving great quality beer actively engaging with our consumers supporting our partners and positively impacting the communities that we serve.

Now moving to our largest region middle Americas, which delivered margin expansion and another quarter of growth.

Speaker 2: Now, moving to our largest region, Midoamerica, which delivers margin expansion and another quarter of growth.

In Mexico, we continued to outperform the industry delivering double digit top and bottom line growth.

Speaker 2: In Mexico, we continue to outperform the industry, delivering double digit top and bottom line growth.

Our above core portfolio grew revenue by mid teens led by the strong performance of models for shell.

Speaker 2: Our above corporate folly grew revenue by mid-teens led by the strong performance of model special

We've continued to progress our digital DTC initiatives, we forward DTC platform Dada now operating in over 60 major cities and fulfilling on average over 300000 orders pretty much in short Mexico continues to execute effectively.

Speaker 2: We continue to progress our digital DTC initiative.

Speaker 2: We follow a DTC platform, Tadad, now operating in over 60 major cities in fulfilling on average over 300,000 orders per month. In short, Mexico continues to execute effectively across all three pillars of our strategy to drive consistent performance.

Across all three pillars of our strategy to drive consistent performance.

In Colombia, our business delivered high single digit top double digit bottom line growth. We forward beer portfolio continued to gain share of total alcohol.

Speaker 2: In Colombia, our business delivered high single digit top in double digit bottom line growth. With our BFWD continue to gain share of total wealth.

Michel Doukeris: In Colombia, our business delivered high single-digit top- and double-digit bottom-line growth, with our beer portfolio continuing to gain share of total alcohol. Our mainstream portfolio drove our performance, delivering double-digit revenue growth led by a particularly strong performance from Poker, which grew volumes by mid-teens. In South America, our business in Brazil delivered double-digit top- and bottom-line growth with approximately 400 basis points of margin expansion. Our beer volumes declined by 2.6% as we cycled a strong performance in Q2 2022, which was supported by post-COVID recovery. Our premium and super premium brands led our performance, delivering a volume increase in the mid-thirties. BEES Marketplace continued to expand, reaching over 700,000 customers, a 29% increase versus Q2 2022, and GMV growing by 64%. Brazil is another example of effective execution across all three pillars of our strategy.

Our mainstream portfolio drove our performance delivering double digit revenue growth led by a particularly strong performance from poker, which grew volumes by mid teens.

Speaker 2: Our main street portfolio drove our performance, delivering double digits revenue growth, led by a particularly strong performance from poker, which grew volumes by mid-ting.

In South America, our business in Brazil delivered double digit top and bottom line growth with approximately 400 basis points of margin expansion.

Speaker 2: In South America, our business in Brazil delivers double digit top and bottom line growth. We will be approximately 400 base points of margin expansion.

Our beer volumes declined by two 6% as a cycle a strong performance in <unk> 2022, which was supported by post Covid recovery.

Speaker 2: Our beer volumes declined by 2.6%. As a cycle, I strong performance in 2 Q2 022, which was supported by post-COVID recovery.

Our premium and Super premium brands led our performance delivering a volume increase in the mid terms.

Speaker 2: Our premium and super premium brands led our performance, delivering a volume increase in the mid-terms.

These marketplace continue to expand reaching over 700000 customers, a 29% increase versus <unk>, 2022, and Jim Z growing by 6% to 4%.

Speaker 2: Please market place continue to expand reaching over 700,000 cuts.

Speaker 2: A 29% increased versus 2 Q2 022, and GMZ growing by 64%. Brazil is another example of effective execution across all three pillars of our strategy.

Brazil is another example of effective execution across all three pillars of our strategy.

Now, let's talk about EMEA in.

Speaker 2: Now let's talk about Emia. Emiro will grow top and bottom line by high single digits.

In Europe , we grew top and bottom line by high single digits.

Michel Doukeris: Now let's talk about EMEA. In Europe, we grew top and bottom line by high single digits. Volumes declined by mid-single digits, outperforming a soft industry in the majority of our key markets. We continue to drive premiumization across Europe. Our premium and super premium brands delivered double-digit revenue growth this quarter, led by Corona and Budweiser. In South Africa, we delivered double-digit top-line growth as our portfolio continued to gain both share of beer and total alcohol. EBITDA was flattish as top line growth was offset primarily by anticipated commodity cost headwinds. Our performance was led by Carling Black Label, the number one beer brand in the country, which grew volumes by high teens. Our global brands grew volumes by more than 50%, driven by Corona. Finally, Asia Pacific.

Volumes declined by mid single digits outperforming a soft industry in the majority of our key markets.

Speaker 2: Volumes declines by needs, single digits, outperforming a soft industry in the majority of our K-Mart.

We continue to drive for immunization across Europe .

Speaker 2: We continue to drive premiumization across Europe . Our premium and super premium brands deliver double digit revenue growth disquarter led by Corona and Budweiser.

Our premium and Super premium brands delivered double digit revenue growth this quarter led by Corona and Budweiser.

In South Africa, we delivered double digit topline growth with four portfolio continued to gain both share of beer in total alcohol.

Speaker 2: In South Africa, we delivered double digit top line growth. We thought portfolio continued to gain both share of beer and total wealth.

EBITDA was flattish as topline growth was offset primarily by anticipated commodity cost headwinds.

Speaker 2: EBIDA was flatish. A stop line growth was of set primarily by anticipated commodity cost to achieve a higher cost.lier. Family up That is the Fle??

Our performance was led by Carling Black label, the number one beer brand in the country, which grew volumes by high teens.

Speaker 2: Our performance was led by Karling Black Label. The number one beer brand in the country, which grew volumes by heighting.

Our global brands grew volumes by more than 50% driven by Corona.

Speaker 2: Our global brands grew volumes by more than 50% driven by Corona. And finally,

And finally APAC.

In China, our business delivered double digit top and bottom line growth driven by continued premium innovation and old premise recovery across our key regions and channels, we outperformed the industry delivering volume growth across all segments of our portfolio this quarter.

Michel Doukeris: In China, our business delivered double-digit top and bottom line growth, driven by continued premiumization and on-premise recovery across our key regions and channels. We outperformed the industry, delivering volume growth across all segments of our portfolio this quarter, led by mid-teens volume growth in both our premium and super premium portfolios. Now, I would like to share with you a few sustainability highlights. We continue to innovate and progress towards our 2025 sustainability goals. Here are a few examples of local initiatives with the potential to scale globally that are driving progress on our sustainability priorities. In climate action, we invested in a biomass processor in our Jupille Brewery in Belgium to produce thermal energy from malt husks, which we expect to reduce our gas consumption by 15% and reduce our carbon emissions.

Speaker 2: In China, our business deliver double-digit stock and bottom-line growth. The reason by continued premunization and own premise to recovery across our key regions in China.

Speaker 2: We outperform the industry, delivering volume, growth across all segments of our portfolio of squatter. Led by mid-twenties volume growth in both, our premium and super premium portfolio.

Led by mid <unk> volume growth in both our premium and Super premium portfolio.

Now I would like to share with you a few sustainability highlights.

Speaker 2: Now, I would like to share with you a few sustainability highlights.

We continue to innovate and progress towards our 2025 sustainability goals.

Speaker 2: We continue to innovate and progress towards our 2025 sustainability goals.

Here are few examples of local initiatives with the potential to scale globally that are driving progress on our sustainability priorities.

Speaker 2: Here are few examples of local initiatives with the potential to scale globally that are driving progress on our sustainability priorities.

In climate action, we invested in our biomass processor in our GPU brewery in Belgium to produce thermal energy from malt.

Speaker 2: In climate action, we invested in a biomass processor in our Jupil Brewery Belgium to produce thermal energy from outhuffs, which we expect to reduce our gas consumption by 15% and reduce our carbon emissions.

With respect to reduce our gaslog assumption by 15% and reduce our carbon emissions.

In smart agriculture, we provide the technical and financial training to over 900 is more holder bartoli farmers, Uganda to strengthen local supply chains.

Speaker 2: In smart agriculture, we provide the technical and financial training to over 900 small holder barley farmers in Uganda to strengthen local supply chain.

Michel Doukeris: In smart agriculture, we provided technical and financial training to over 900 smallholder barley farmers in Uganda to strengthen local supply chains. In water stewardship, we are installing new vacuum pump technology in breweries across several markets to reduce water usage in bottle fillers by approximately 50%. For circular packaging, our business in Brazil launched a nationwide returnable bottle campaign to help increase the use of returnable packaging by promoting affordability and sustainability. Now, let's move on to our strategic pillars. Let's start with pillar one of our strategy, lead and grow the category. We continue to execute on our five levers to drive category expansion and deliver a strong quarter of profitable top-line growth. We are leading and growing the category by offering superior quarter positions, developing new consumption occasions, and expanding our premium and beyond beer portfolios.

In water stewardship, we are installing new vacuum pumps technology, Bruce across several markets to reduce water usage and bottled fillers by approximately 50%.

Speaker 2: In water stewardship, we are installing new vacuum pump technology brews across several markets to reduce water usage in bottle fillers by approximately 50%.

For simpler packaging, our business in Brazil, launching a national wide returnable bottle campaign to help increase the use of returnable packaging by promoting affordability and sustainability.

Speaker 2: For circular packaging, our business in Brazil launched a nationwide, returnable bottle campaign to help increase the use of returnable packaging by promoting affordability and sustainability. Now,

Now, let's move on to our strategic pillars lots.

Let's start with pillar one of our strategy lead and grow the category.

Speaker 2: Let's start with pillar one of our strategy, lead and grow the category.

We continue to execute on our five levers to drive category expansion and delivered a strong quarter of profitable top line growth.

Speaker 2: We continue to execute on our five levers to drive category expansion and deliver a strong quarter of profitable top-line growth.

We are leading and growing the category by offering superior courtroom positions.

Speaker 2: We are leading and growing the category by offering superior core propositions.

Developing new consumption occasions in expanding our premium and beyond beer portfolios.

Speaker 2: developing new consumption occasions and expanding our premium and beyond beer portfolio.

Our global brands continued to scale and drive personalization across our markets.

Speaker 2: Our global brands continue to scale and drive premiumization across our market.

Michel Doukeris: Our global brands continue to scale and drive premiumization across our markets. The combined revenues of Corona, Stella Artois, and Budweiser grew by 18.4% outside of brands' home markets, led by Corona, which was recently recognized by Kantar BrandZ as the number one fastest growing global brand by value with 23.7% growth. Budweiser delivered a revenue increase of 16.9% with broad-based growth in 25 markets, and Stella Artois grew by 14.5%. Now let's turn to our second strategic pillar, digitize and monetize our ecosystem. BEES continued to accelerate usage and reach, capturing $9.2 billion in gross merchandise value this quarter, a 30% increase year over year, and reaching 3.3 million monthly active users.

The combined net revenues of Corona, Stella Artois, and Budweiser grew by 18, 4% outside of the Brands' home markets led by Corona, which was recently recognized by Kantar brand Z as the number one fastest growing global brand by value with <unk>.

Speaker 2: A combined ravine of corona feller to a in Budweiser, grew by 15.4% outside of Brent's home markets, led by corona, which was recently recognized by Cantar Brent Z as the number one fastest growing global brand by value, with 23.7% growth.

Three 7% growth.

Budweiser delivered a revenue increase of 16, 9% with broad based growth in 25 markets and Stella Artois grew by 14, 5%.

Speaker 2: But Dweiser delivered a revenue increase of 16.9%. We've broad-based growth in 25 markets, and Stellar-Tua grew by 14.5%.

Now, let's turn to our second strategic pillar digitize and monetize our ecosystem.

Speaker 2: Now let's turn to our second strategic pillar. Digitize and monetize our equals.

<unk> continues to accelerate usage and reach capturing nine 2 billion U S dollars in gross merchandising value squatted, a 30% increase year over year, and reaching $3 3 million monthly active users.

Speaker 2: Please continue to accelerate usage and reach capturing $9.2 billion US dollars in gross merchandising valued squarting, a 30% increase year-over-year, and reaching 3.3 million monthly active use.

Customer satisfaction continues to improve with our weighted average net promoter score improving to plus 60.

Speaker 2: Customer subsection continue to improve. We follow weighted average net promoter score improving to plus 60. Up 10 points.

Michel Doukeris: Customer satisfaction continued to improve with our weighted average net promoter score improving to +60, up 10 points since last year. In 15 of the 20 markets where BEES is live, our customers are also able to purchase third-party products through BEES Marketplace. Customer adoption is increasing with 63% of BEES customers now also BEES Marketplace users. In Q2, BEES Marketplace generated approximately $340 million in GMV, representing approximately $1.3 billion on an annualized basis. Now let's talk about how we are strengthening our direct relationship with our consumers. Our digital D2C products, Zé Delivery, TaDa Delivery, and PerfectDraft, are now available in 20 markets and generated over 16.5 million orders and $115 million in revenue this quarter.

10 points since last year.

In 15 of the trading markets, where our business life. Our customers are also able to pull chase third party products through <unk> marketplace.

Speaker 2: In 16 of the 20 markets where B is his life, our customers are also able to purchase third-party products through B's marketplace.

Customer adoption is increasing with 63% of <unk> customers now also be as marketplace users.

Speaker 2: Customer adoption is increasing. We 63% of these customers, now also be a marketplace user.

In the second quarter based marketplace generated approximately 340 million U S dollars and Jim Z, representing approximately $1 3 billion U S dollars.

Speaker 2: In the second quarter, these markets placed generated approximately $340 million in GMZ, representing approximately $1.3 billion on annualized basis.

Annualized basis.

Now, let's talk about how we are strengthening our direct relationship with our consumers.

Speaker 2: Now let's talk about how we are strengthening our direct relationship with our consumers. Our digital...

Our digital D to C products that delivery Dada and perfect draft are now available in 20 markets and <unk>.

Speaker 2: Z delivery, Tadat and perfect draft are now available in 20 markets and generated over 16.5 million orders and a hundred and fifteen million US dollars in revenue this quarter.

Generated over $16 5 million orders and 115 million U S dollars in revenue this quarter.

We continue to leverage our digital dentistry products to further develop new consumption locations.

Speaker 2: We continue to leverage our digital DC products to further develop new consumption opportunities.

Michel Doukeris: We continue to leverage our digital D2C products to further develop new consumption occasions. For example, in Brazil, Zé Delivery enabled the launch of Corona Sunset Hours, an everyday activation encouraging consumers to disconnect from work and reconnect with friends in the early evening. 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.

For example, in Brazil that deliver enabled the launch of Corona sunset hours and everyday activation encouraging consumers to disconnect from work and reconnect with friends in the early evening.

Speaker 2: For example, in Brazil, the delivered enabled the launch of Corona sunset hours. And every day activation, encouraging consumers to disconnect from work and reconnect with friends in their lives.

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

Speaker 2: 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, Michelle.

Thank you Michelle.

Good morning, good afternoon, everyone.

Fernando Tennenbaum: Thank you, Michel. Good morning. Good afternoon, everyone. We aim to maximize value by focusing on three areas, optimized resource allocation, robust risk management, and efficient capital structure. With respect to capital allocation, we are focused on maximizing long-term value creation by dynamically balancing our priorities. We continue to invest in organic growth to support our strategy to lead and grow the category and digitize and monetize our ecosystem. In H1 2023, disciplined overhead management and efficient allocation of resources enable us to invest approximately $5.6 billion combined in sales and marketing and CapEx. The excess cash generated by our business is then dynamically allocated to our three capital allocation priorities, deleveraging, selected M&A, and return of capital to shareholders.

We aim to maximize value by focusing on three areas.

Speaker 3: We aim to maximize value by focusing on three areas, optimize the resource allocation, robust risk management,

The resource allocation.

Robust risk management.

An efficient capital structure.

With respect to capital allocation, we are focused on maximizing long term value creation by dynamically balancing our priorities.

Speaker 3: We are focused on maximizing long-term variation by dynamically balancing our priorities.

We continued to invest in organic growth to support our strategy to lead and grow the category and digitize and monetize our ecosystem.

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.

In the first half of 2023 disciplined overhead management and efficient allocation of resources enable us to invest.

Speaker 3: In the first half of 2023, discipline overhead management and efficient allocation of resources enable us to invest approximately $5.6 billion USD, combined in sales and marketing and

<unk> five 6 billion U S dollars combined it into sales and marketing and Capex.

The excess cash generated by our business is then dynamic allocated to our three capital allocation priorities.

Speaker 3: The excess cash generated by our business is then dynamically located to our three capital location priorities.

The leveraging.

Selective M&A and return of capital to shareholders.

Speaker 3: Select the M&A and return of capital to shareholders.

As you can see the next slide.

Two times net debt to EBITDA remains the point at which maximize value.

Fernando Tennenbaum: As you can see in the next slide, 2x net debt to EBITDA remains the point at which we maximize value, though approximately 90% of the benefits from the leveraging can be captured as we approach 3x. As of 30 June 2023, our net debt to EBITDA ratio reached 3.7x, down from 3.86x year-over-year, with net debt reaching $73.8 billion. As a reminder, we typically generate the vast majority of our cash flow in H2. Net debt was also impacted by the increased dividend paid in H1 2023, as well as the translational FX headwinds. Our debt maturity profile remains well distributed, with no bond maturities in 2023 and no relevant medium-term refinancing needs.

Speaker 3: Two point times net that to beta remains the point at which you maximize value, though approximately 90% of the benefits from the leveraging candy capture as we are.

Approximately 90% of the benefits from the leveraging can be captured as we approach three times.

As of June 30.

Our net debt to EBITDA ratio reached three seven times.

Speaker 3: As of June 30th, our net debt to be the ratio reaches 3.7 times.

Down from 386 times year over year.

Speaker 3: Down from 3.86 times, all year over again.

With net debt reached $73 8 billion U S dollars.

Speaker 3: We snap that reaching 73.8 billion US dollars.

As a reminder.

We typically generate the vast majority of our cash flow in the second half of the year.

Speaker 3: As a reminder, we typically generate the vast majority of our cash flow in the second half of this.

Net debt was also impacted by the increase of dividend paid in the first half of 2023 as well as the translational FX headwinds.

Speaker 3: Net that was also impacted by the increase in divend fading the first half of 2023 as well as the translational effects head.

Our debt maturity profile remains well distributed with no bond maturities in 2023, and no relevant medium term refinancing needs.

Speaker 3: Our debt-material profile remains well distributed with no bond maturities in 2023 and no relevant mid-on-term refinancing needs. If you look at our...

You should look at our debt maturity profile.

Fernando Tennenbaum: If you look at our debt maturity profile, we have $3 billion worth of bonds maturing through 2025. As of 30 June, we had total liquidity of $16.9 billion, which consisted of $10.1 billion available under committed long-term credit facilities and $6.8 billion of cash equivalents. Our bond portfolio has an average pre-tax coupon of around 4% and a weighted average maturity of 14 years. In addition, our debt portfolio does not have any financial covenants and is comprised of a variety of currencies diversifying our FX risk. Ninety-six percent of our bonds have a fixed rate insulated from interest rate volatility and inflation. Now let me take you through the drivers of our underlying EPS this quarter.

We have 3 billion U S dollars worth of bonds maturing through 2025.

Speaker 3: We have 3 billion US dollars worth of bonds maturing through 2025.

As of June 30.

We had total liquidity of $16 9 billion U S dollars.

Speaker 3: We had total equity of $16.9 billion US dollars, which consisted of $10.1 billion US dollars available under committed long term credit facilities, and $6.8 billion US dollars of cash equivalent.

Which consisted of $10 1 billion U S dollars available under committed long term credit facility.

<unk> six $8 billion of cash equivalents.

Our bond portfolio has an average pre tax coupon of around 4% and a weighted average maturity of 14 years.

Speaker 3: Our bone portfolio has an average pre-text coupon of around 4% and a weighted average maturity of 14 years.

In addition.

Our debt portfolio does not have any financial covenants and is comprised of a variety of currencies diversifying our FX risk.

Speaker 3: In addition, our debt portfolio does not have any financial co-op.

Speaker 3: and is comprised of a variety of currencies diversifying our effects.

96% of our bonds have a fixed rates insulated from interest rate volatility and inflation.

Speaker 3: 96% of our bones have a fixed rate insulated from interest rate will atelage and inflation.

And now let me take you through the drivers of our underlying EPS this quarter.

Speaker 3: And now let me take you through the drivers of our underlying EPS squad.

We delivered EPS of <unk> 72 cents per share.

Speaker 3: We deliver EPS of 72 cents per share versus 73 US cents per share last year. As we cycle a 4 cents per share net benefit from tax credits in Brazil year-of-aeroying.

Fernando Tennenbaum: We delivered EPS of $0.72 per share versus $0.73 per share last year, as we cycle a $0.04 per share net benefit from tax credits in Brazil year-over-year. Organic EBITDA growth accounting for $0.12 per share was offset primarily by translational effects. Lower income tax increased the EPS by $0.04. With that, I would like to hand it back to Michel for some final comments before we start our Q&A session. Michel?

Versus 73 U S cents per share last year.

As we cycle, a four cents per share net benefit from tax credits in Brazil year over year.

Organic EBITDA growth accounting for 12 <unk> per share was offset primarily by translational effects.

Speaker 2: Organic EBITDA growth accounting for 12 cents per share was a set primarily by translational effects. Lower income tax

Lower income tax.

Increase in EPS by <unk> <unk>.

With that I would like to hand, it back to Michele for some final comments before we start our Q&A session Michelle.

Speaker 2: With that, I would like to hand it back to Michelle for some final comments before we start our DNA session. Michelle?

Michelle Thanks.

Thanks Fernando.

Before opening for Q&A I would like to take a moment to recap my key takeaways for the quarter.

Michel Doukeris: Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap my key takeaways for the quarter. While this quarter was not without challenge, we continue to make progress in executing across each of our three strategic pillars. Our business momentum continued this quarter with double-digit top line growth in four of our five operating regions. Driven by the strength of our leading brand portfolio, we grew volumes in the majority of our markets and revenues in over 85%. We made important strategic choices in pricing and other revenue management initiatives, which drove continued strong net revenue per hectoliter growth of 9%. We progressed our digital transformation, generating $9.2 billion in GMV through BEES, with 63% of BEES customers now also BEES marketplace buyers, delivering a GMV increase of 41% versus last year.

Speaker 2: Before opening for Q&A, I would like to take a moment to recap my personal? take a moment to update you Premium Q!

While this quarter was not without challenges, we continued to make progress in executing across each of our three strategic pillars.

Speaker 2: Why this quarter was not without challenge? We continue to make progress in executing across each of our three strategic pillars.

Our business momentum continued this quarter with double digit topline growth in four of our five operating regions.

Speaker 2: Our business momentum continues this quarter with double digit top line growth in four of our five operating rates.

Driven by the strength of our leading brand portfolio. We grew volumes in the majority of our markets and revenues and over 85%.

Speaker 2: The reason why they strengthen for leading Brentwood volume, we grew volumes in the majority of our markets and revenues in over 85%.

We made important strategic choices and pricing and other revenue management initiatives, which drove continued this strong enough to revenue per hectoliter growth of 9%.

Speaker 2: We made important strategic choices in pricing and not their revenue management initiative.

Speaker 2: which trust the strong aceite growth of 9 percent.

We progressed, our digital transformation journey.

<unk> nine 2 billion U S dollars in <unk>.

Speaker 2: Generating $9.2 billion in Jim V3B.

We have 63% of <unk> customers now also be as marketplace buyers delivering a jim the increase of 41% versus last year.

Speaker 2: We 63% of these customers now also be a marketplace buyer. Delivering a gym increase of 41% versus less.

EBITDA grew organically by 5%.

Speaker 2: Evid the grew organically by 5% as discipline overhead management mostly offset the elevated costing value.

Michel Doukeris: EBITDA grew organically by 5% as disciplined overhead management mostly offset the elevated cost environment. We are actively engaging with our consumers globally and investing to drive long-term value creation, and our results this quarter are another proof point of the strength of our global footprint. With that, I would like to hand it back to Jesse for the Q&A. Thank you, Jesse.

As disciplined overhead management, mostly offset that elevated cost environment.

We are actively engaging with our consumers globally.

Speaker 2: We are actively engaging with our consumers globally and investing to drive long-term value creation. And our results are squatter at another proof point of the strength of our global footprint.

Investing to drive long term value creation and our results. This quarter are another proof point of the strength of our global footprint.

With that I would like to hand, it back to Jeff.

The Q&A Thank you Jeff.

Speaker 2: With that, I would like to hand it back to Jeff for the Q&A. Thank you, Jeff.

Thank you the floor is now open for questions and the interest of time, we will limit participants to one question and one follow up again, if you have a question or comment. Please press star one on your Touchtone phone is at any point. Your question has been answered you may remove yourself from the queue by pressing star two.

Operator: 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. 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 handset to provide optimal sound quality. Thank you. Our first question is coming from Trevor Stirling with Bernstein. Please proceed with your question.

Speaker 1: 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. 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 handset to provide optimal sound quality.

Speaker 1: We do ask that while you pose your question, you pick up your handset to provide optimal sound quality.

Thank you. Our first question is coming from Trevor Stirling with Bernstein. Please proceed with your question.

Speaker 1: Thank you our first question is coming from Trevor Sterling with Bernstein. Please proceed with your questions.

Hi, Michelle in Fernando's of two questions from my side. Please the first one Michelle showing youre looking at your chart showing the market share trends over time in the U S. It does look maybe I'm being too optimistic here that.

Speaker 4: Hi, Michelle and Fernando. So two questions to my side please. The first one Michelle showing you're looking at your chart showing the market share trends over time in the US. It does look maybe on being too optimistic here that.

Trevor Stirling: Hi, Michel and Fernando. Just two questions from my side, please. The first one, Michel. You're looking at your chart showing the market share trends over time in the US. It does look, maybe I'm being too optimistic here, that last week started to see a little bit of an improvement in market share trends. Is that something you'd agree with? So is that being driven by Bud Light itself or the other brands? So basically, Bud Light's still weak, but the other brands and the collateral damage, if you like, is starting to reduce. The second question, probably one more for Fernando. The very good margin performance in Middle America, as I think you mentioned in the release, Mexico 175 bps of margin expansion in the quarter.

Last week.

To see a little bit of an improvement in market share trends is that something you would agree with.

Speaker 4: Last we start to see a little bit of an improvement in market share trends. Is that something you'd agree with?

So it was not being driven by Bud light itself over the other brands. So basically bud light so weak, but the other brands in the collateral damage if you like to start to reduce.

Speaker 4: So is that being driven by Bud Light? It tells all the other brands, so basically Bud Light's a week, but the other brands and the collateral damage, if you like, are starting to reach.

And the second question, probably one more for Fernando.

Very good margin performance in Middle America is I think you mentioned in the release, Mexico of 175 bps of margin expansion in the quarter, maybe you could give a little bit of color on that and is that sustainable for the rest of the year.

Speaker 4: And the second question, probably one more for Fernando. Very good margin performance in middle America. I think you mentioned in the release Mexico 175 bits of margin expansion, the quarter. Maybe you could give a little bit of color on that. And is that sustainable for the rest of the year?

Trevor Stirling: Maybe you could give a little bit of color on that, and is that sustainable for the rest of the year?

Hi, Trevor.

Thanks for the question I'll take the first one here.

Speaker 2: I travel morning, thank for the question. I'll take the first one here and for none, we can take the second.

Michel Doukeris: Hi, Trevor. Good morning. Thanks for the question. I'll take the first one here, and then, Fernando can take the second. The main objective for us to share this data, which is public data, is to one, bring a little bit the idea that we see, which is a more stable share over the last couple of weeks. You see that from May to June to the early July readings, that is actually like an improvement on the delta share, as you come month to month, week to week. But it's more a stable scenario. Now, of course, brands and the team in the US working hard to build it back and to earn back our consumers as our commercial activities are in place.

Fernando can take the second.

The main objective for us to share this data, which is public data.

Speaker 2: The main objective for us to share this data, which is public data, is...

Is.

To one bring a little bit the idea that we see which is a modest table shared over the last.

Speaker 2: to one bring a little bit the idea that we see, which is a more stable shell over the last.

A couple of weeks.

You'll see that from May to June to the early July readings that is actually like an improvement on the Delta sure.

Speaker 2: You see that from May to June to the early July readings, that is actually like an improvement on the Delta share as you come month to month, week to week. But it's more a stable scenario. And now, of course, brands and the team in the US working hard to build it back and to earn back consumers as our commercial activities are in place.

As you come month to month week to week, but it's more a stable scenario and now of course brands and the team in the U S working hard to build it back and tour and back.

Consumers as our commercial activities.

And in place.

And we continue to invest for the long term.

Michel Doukeris: We continue to invest for the long term, brewing great quality beer, supporting our wholesalers and the team there. The reading is really stabilization with signals of improvement, when you cut across different states and channels.

Speaker 2: And we continue to invest for the long term, brewing great quality beer, supporting our wholesalers and the team there. But the reading is really stabilization with signals of improvement when you cut across different states and channels.

Great quality beer supporting our wholesalers and the team there, but the reading is really.

<unk>, we have signals of improvement when you cut across different states and channels.

And Trevor.

Hello, Fernando here on your question on margins. When we started this year, we said that we would have cost pressures to a lesser extent than last year and it was not evenly distributed across the globe.

Fernando Tennenbaum: Trevor, hello, Fernando here. On your question on margins, when we started this year, we said that we would have cost pressures to a lesser extent than last year, and it was not evenly distributed across the globe. As the year goes by, what we've been seeing is that of course you have some hedges in places, and a lot of your cost of goods sold is hedged, but there are always a portion of your cost of goods sold that cannot be hedged. The latest evolution of commodities is definitely helping you on that. You definitely are seeing the benefit in Latin America. You mentioned Mexico, it's right. You can also refer to Brazil.

Speaker 3: and Trevor, hello Fernando here. On your question on margins, when we started this year, we said that we would have cost pressures to a lesser extent than last year, and it was not even distributed across the globe.

As vehicles by what we've seen is that of course, you have some hedges in places and a lot of your cost of goods sold as hedges, but there are always a portion of your cost of goods sold that cannot be hedges and the latest evolution of.

Speaker 3: As the Irgels buy, what we've been seeing is that of course you have some hedges in places and a lot of your cost of wood soaps is hedged, but there are always a portion of your cost of wood soaps that cannot be hedged.

Of commodity is definitely help you on that.

Speaker 3: And the latest evolution of commodates is definitely healthy on that. So you definitely are seeing the benefit in Latin America, you mentioned Mexico, it's right. You can also refer to Brazil. Brazil is also performing well from a margin standpoint.

So you're definitely seeing the benefit in Latin America, you mentioned, Mexico right.

<unk> also referred to Brazil, Brazil has also performed well from a margin standpoint.

Fernando Tennenbaum: Brazil is also performing well from a margin standpoint. If you start to fast-forward and look at the costs we are seeing now, the effects we are seeing now and how that's gonna unfold, definitely you should. Again, we are not fully hedged, and there are a lot of numbers that can change over time, but you should expect to start having some tailwinds, especially when you go into next year. It's too early to say, it's too early to be a hundred percent sure, but definitely start having some regions that will have some tailwinds going forward.

And.

And then is to start the first forward looking the cost we are seeing now the effects, we're seeing now and how that's going to unfold.

Speaker 3: And then if you start to fast forward and looking at the cost we are seeing now, the effects we are seeing now and how that's going to unfold, definitely you should then again, we are not fully hedge it, then there are a lot of numbers that can change over time, but you should expect to start having some tailwinds, especially when you go into next year. It's true to what it should say, true to what it should be 100% sure, but definitely start having some regions that we have some tailwinds going forward. Perfect, thanks.

Definitely you should you should then again, we are not fully hedge and then there are a lot of a number that can change over time, but you should expect to start having some tailings, especially when you go into next year.

It's too early to say, it's too early to be 100% sure, but definitely start having some regions that we have some things going forward.

Perfect. Thank you very much Fernando Thank you Michelle.

Mitch Collett: Perfect. Thank you very much, Fernando, and thank you, Michel.

Trevor Stirling: Perfect. Thank you very much, Fernando, and thank you, Michel.

Thank you.

Thank you. The next question is coming from Mitch <unk> with Deutsche Bank. Please proceed with your question.

Michel Doukeris: Thank you.

Speaker 5: Thank you.

Operator: Thank you. The next question is coming from Mitch Collett with Deutsche Bank. Please proceed with your question.

Speaker 1: Thank you. The next question is coming from Mitch Collette with Deutsche Bank. Please Please proceed with your questions.

Hi, Michelle Hi, Fernando.

Given you did organic EBITA growth of 9% in the first half.

Mitch Collett: Hi, Michel. Hi, Fernando. Given you did organic EBITDA growth of 9% in the H1, but 5% in the H2, which is pretty impressive given the challenges you faced, can you maybe run us through the puts and takes for the second half? Specifically, what you're assuming for the US, and how we should think about the shape of Q3 and Q4. Thank you.

Speaker 6: I'm a show, high finando. Given you did organic ebit dark growth of 9% in the first half, but 5% in the second half, which is pretty impressive, given the challenges you've faced. Can you maybe roll us through the puts and takes?

But 5% in the second half, which is pretty impressive given the challenges you face can you may be virtus III, the puts and takes for the second half.

Specifically, what you're assuming for the U S.

Speaker 6: the second half, specifically what you're assuming for the US and how we should think about the shape of Q3.

And how we should think about the shape of Q3 and Q4. Thank you.

Hi, Mitch.

I will just try to clarify the question I think that you said, 9% first half and the 5% that you referred to as quarter two right.

Speaker 2: I'll just try to clarify the question. I think that you said 90% first half and the 5% that you refer to is quarter to right.

Michel Doukeris: Hi, Mitch. I would just try to clarify the question. I think that you said 9% H1, and the 5% that you referred to is Q2, right?

Yes, okay.

Okay.

I think that again, the first half of the year was a strong.

Mitch Collett: Yes.

Michel Doukeris: Yeah. Okay. I think that again, the first half of the year was strong. Of course, this Q2, we had our own challenge here, but in puts and takes, you saw things working very well across four out of our five regions with very strong growth. I think we mentioned before that the H2, we would have differences in terms of Q3 and Q4 because of the World Cup last year. We have at the back end of the year some of the benefits Fernando was mentioning in terms of the commodities already turning into more tailwinds than headwinds. This is in the back end of the year. We have a very strong phasing as last year we invested more sales and marketing aligned with FIFA in the back end of the year.

Speaker 2: I think that again, the first half of the year was strong.

Of course this quarter too.

Speaker 7: of course, this quarter to...

We had our own challenge here, but the inputs and takes you saw things working very well across four out of our five regions with very strong growth.

Speaker 2: We had our own challenge here, but in puts and takes you saw things working very well across four out of our five regions with very strong growth.

And I think we mentioned before that the second half of the year, we would have differences in terms of quarter, three and quarter four because of the World Cup last year.

Speaker 2: And I think we mentioned before that the second half of the year, we would have differences in terms of quarter three and quarter four because of the World Cup last year.

So we have and the backend of the year some of the benefits turnaround was mentioning in terms of the commodity it's already currently into more <unk> than headwinds. So this is in the backend of the year and we have a very strong phasing as last year, we invested more sales and marketing.

Speaker 2: So we have at the back end of the year, some of the benefits Fernando was mentioning in terms of the commodities already turning into more tailwinds than headwinds. So this is in the back end of the year.

Speaker 2: And we have a very strong phasing. As last year we invested more sales and marketing aligned with FIFA in the back end of the year. And this year we have decided that we planted heavy up investments on the Q2.

<unk> aligned with FIFA in the backend of the year and this year, we have decided in the planet.

Heavy up investments on the Q2 Q3, so we see now quarter three quarter four coming the balance is more.

Michel Doukeris: This year we have decided and we planned heavy up investments on the Q2, Q3. We see now Q3, Q4 coming. The balance is more commodity tailwinds in Q4, heavier investments in Q2, Q3 in sales and marketing, while we maintained our outlook for the full year. I'm not sure, Fernando, you want to comment something.

Speaker 2: So we see now quarter three, quarter four coming. The balance is more.

Commodity.

<unk> in the quarter four have here the investments in quarter two quarter three in sales and marketing while.

Speaker 2: Commod that Teo wins in the quarter four have yet investments in quarter two quarter three in season marketing why oh We maintain it our outlook for the full year. I'm not sure for now. You want to compliment something

We maintained our outlook for the full year I'm not sure for 91 to complement something.

So I think that's exactly right Sean.

We remain we remain confident in the business.

Fernando Tennenbaum: I think that's exactly right. I feel we remain confident in the business. As Michel pointed out very well, we had a very good performance on Q2 on four out of our five regions. The performance going forward, we need to monitor the phasing, but we remain confident, we are making no changes to our outlook, and we continue to expect to have a strong year.

Speaker 3: I think that that's exactly right. As you remain confident in the business, as Michelle pointed out very well, we had a very good performance soon, to tune on four out of five regions. And the performance going forward, we need to monitor the phasing, but to remain confident, we are making no changes to our outlook, and we continue to expect to have a strong year.

As Michelle pointed out very well, we had a very good performance soon to tune on photo out of our five.

S regions.

And the performance going forward, we need to monitor the phasing, but we remain confident we are making no changes to our outlook and we continue to expect to have a strong year.

Thank you both.

Mitch Collett: Thank you, guys.

Thank you. Our next question is coming from the line of Rob <unk> with Evercore. Please proceed with your question.

Operator: Thank you. Our next question is coming from the line of Rob Ottenstein with Evercore. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from a line of Rob Ahtenstein with Evercore. Please proceed with your question.

Great. Thank you very much I want to circle back to the U S.

Speaker 8: Great, thank you very much. I want to circle back to the US.

Rob Ottenstein: Great. Thank you very much. I wanna circle back to the US. Two of the things that I think have concerned investors the most is, you know, what's going on on-premise, you know, concerns that the on-premise may be worse than what we see in the scanner data. So if you could talk about that, and what you see on the on-premise with taps. And then, you know, the promo environment. Obviously, you know, we see in the press and on the news a lot of, you know, pretty deep discounts and couponing. You know, how is the promo environment now that we're in the middle of the summer season, and how does it compare to the past? Thank you.

Robert Ottenstein: Great. Thank you very much. I wanna circle back to the US. Two of the things that I think have concerned investors the most is, you know, what's going on on-premise, you know, concerns that the on-premise may be worse than what we see in the scanner data. So if you could talk about that, and what you see on the on-premise with taps. And then, you know, the promo environment. Obviously, you know, we see in the press and on the news a lot of, you know, pretty deep discounts and couponing. You know, how is the promo environment now that we're in the middle of the summer season, and how does it compare to the past? Thank you.

Two of the things that I think have concerned investors. The most is what's going on on premise concerns at the on premise.

Speaker 8: Two of the things that I think have concerned investors the most.

Speaker 8: is, you know, what's going on on on premise, you know, concerns that the on premise.

Maybe worse than what we see in the scanner data. So if you could talk about that.

Speaker 8: maybe worse than what we see in the scanner data. So if you could talk about that and what you see on the on-premise with CAP.

And what you see on the on premise with taps.

And then the promo environment, obviously, we see in the press and on the news a lot of pretty deep discounts and couponing.

Speaker 8: And then the promo environment, obviously, we see in the press and on the news a lot of pretty deep discounts and couponing. How is the promo environment that we're in the middle of the summer season and how does it compare to the past? Thank you.

How is the promo environment that we're in the middle of the summer season, and how does it compare to the past. Thank you.

Hey, Robert Good morning, Thanks for the question.

Speaker 2: Robert, good morning. Thank you for the question. Two questions here. I think that owns enough.

Michel Doukeris: Hey, Robert. Good morning. Thanks for the question. Two questions here. I think that on and off, when you look at the numbers, pretty similar. There's nothing big to highlight in difference between on-premise and off-premise so far. I think one important indicator that you brought that we are always monitoring is taps, and that is. It's not now. I think that since the comeback from COVID, there is a quite meaningful rotation in terms of taps. We see bars, restaurants optimizing for high turnover. I think that's the best way to explain what's happening. You see brands that have higher sales and turnover getting more taps. This large variety that some points of sales carry that had very low productivity being delisted.

Two questions here I think that owns and off when you look at the numbers.

Pretty similar there is nothing like big to highlight it.

Speaker 2: When you look at the numbers, pretty similar, there's nothing like big to highlight in difference between all premise and off premise so far. And I think one important indicator that you brought, that we are always monitoring is that.

The difference between on premise and off premise so far.

And.

I think one important indicator that you brought that we are always monitoring is steps and that is does not now I think that since the comeback from COVID-19 that is.

Speaker 2: And there is, it's not now, I think that since they come back from COVID, there is a...

A quite meaningful rotation in terms of taps.

Speaker 2: a quite meaningful rotation in terms of taps.

And we see.

Bars restaurants, optimizing for high turnover I think that's the best way to to explain whats happening and you'll see brands that have higher.

Speaker 2: bars, restaurants, optimizing for high turnover. I think that that's the best way to explain what's happening. And you see brands that have higher sales and turnover getting more taps.

Sales in turnover getting more taps and these large a variety that some points of sales carry that.

Speaker 2: And there's a large variety that some points of space carry that

Had very low productivity being the listed we see this happening across some of our craft brands or brands that have low turnover.

Speaker 2: had very low productivity being delisted. We see this happening across some of our craft brands, or brands that have low turnover. We measure this with our wholesalers and through independent. We have retained more than 98% of our taps throughout the year. And some of our brands are gaining a lot of taps.

Michel Doukeris: We see this happening across some of our craft brands or brands that have low turnover. We measure this with our wholesalers and through independents. We have retained more than 98% of our taps throughout the year, and some of our brands are gaining a lot of taps. Some of our brands are declining some taps, but all in all, on-trade and off-trade performance is very similar, as you could see on our numbers. The second point I think that we addressed in the last call, the promotional activities, pricing, and discounts. The environment in pricing, I think, is healthy, if you think about the inflation last year, this year, the fact that we took 2 price increases last year given the size of the inflation and costs, and that is a good carryover throughout this year.

We measure this with our wholesalers and through independent.

We have retained more than 98% of our steps throughout the year and some of our brands are gaining a lot of steps some of our brands are declining some taps, but all in all on trade and off trade performance very similar as.

Speaker 2: Some of brands are declining some tabs, but all in all, on trade and off trade performance, very similar as you could see on our numbers.

As you could see on our numbers.

The second point I think that we address it in the last call their promotional activity.

Speaker 2: The second point I think that we are arrested in the last call, the promotional activities pricing and discounts. So the environment in pricing, I think that...

Pricing and.

Discounts so the environment in pricing I think that.

Healthy if you think about the inflation last year. This year. The fact that we took two price increases last year, given the size of an inflation in costs and that is a good carryover throughout this year.

Speaker 2: healthy. If you think about inflation last year, desire, the fact that we took two price increases last year, giving the size of the inflation and costs, and that is a good carryover through

As per plan, we concentrated more of our commercial activity in the middle of this year. So this doesn't have anything to do with the Bud light situation was planted and analysis shared with our wholesalers last year, we see that that and the intensity of the promotional activity in line with historical.

Speaker 2: As per plan, we concentrated more our commercial activities in the middle of this year. So this does not have anything to do with the more light situation was planted. And now said shared with our wholesalers last year, we see the depth and the intensity of the promotion of the activities in line with historical levels. There is no anything beyond that. But of course, during the summer, you saw some activities.

Michel Doukeris: As per plan, we concentrated more of our commercial activities in the middle of this year, so this doesn't have anything to do with the Bud Light situation, which was planned and announced and shared with our wholesalers last year. We see the depth and the intensity of the promotional activities in line with historical levels. There is nothing beyond that. But of course, during the summer, you saw some activities and people bringing a lot of news around that, but not different than what the Super Bowl activity is, promotions, coupons across the board. Of course, we saw in the US these two price increases last year trying to catch up with inflation. Inflation is slowing down a little bit this year, but it's still neither the margins nor the full price have caught up with inflation yet.

Levels that is no.

Anything beyond that.

But of course during the summer you saw some activity and people, bringing a lot of news around that but not different than what the superbowl activities promotions coupons across the board and of course.

Speaker 2: and people bringing a lot of news around that, but not different than what superboard activities, promotions, coupons across the board. And of course, we saw in the US this two-press increase last year trying to catch up with inflation. Inflation is slowing down a little bit this year, but it's still neither margins or the full price caught up with inflation, yeah.

We saw in the U S. This two price increases last year trying to catch up with inflation inflation is slowing down a little bit this year, but it's still on either margins or the full price caught up with inflation yet. So we continue to monitor the environment.

And especially the consumer purchasing power to have our plants for the end of this year to next year in place.

Michel Doukeris: We continue to monitor the environment and especially the consumer purchasing power to have our plans for the end of this year, next year in place. Thank you for the question.

Speaker 2: So we continue to monitor the environment and especially the consumer purchase power to have our plans for the end of the year next year in place.

Michel Doukeris: We continue to monitor the environment and especially the consumer purchasing power to have our plans for the end of this year, next year in place. Thank you for the question.

Thanks for the question.

Thank you.

Thank you. The next question is coming from the line of Laurence <unk> with Barclays. Please proceed with your question.

Rob Ottenstein: Thank you.

Robert Ottenstein: Thank you.

Operator: Thank you. The next question is coming from the line of Laurence Whyatt with Barclays. Please proceed with your question.

Speaker 1: Thank you. The next question is coming from the line of Lawrence Wyatt with Barclays. Please proceed with your question.

Hi, Thanks, very much for the questions a couple for me firstly in regards to the.

Laurence Whyatt: Hi. Thanks very much for the questions. A couple from me. Firstly, in regard to the sales in the US potentially starting to stabilize, do you think the cost base in the US is in or around the right place at the moment? Secondly, on Brazil, you said you perhaps lost a little bit of share this quarter. I think at the full year results, you stated how much share you gained over the past few years. Are you comfortable with the level of market share that you're taking in Brazil? And is there anything further that can be done there? Thank you very much.

Speaker 9: Hi, thanks very much for the question. It's a couple for me. Firstly, in regards to the sales in the US, potentially, so I'm to stabilize, I do think the cost-base in the US is in around the right place at the moment. And then secondly, on Brazil, you said you perhaps lost a little bit of share to quarter, I think, at the four-year results.

Sales in the U S potentially signed stabilized or do you think the cost base in the U S is in around the right place at the moment and then secondly on Brazil, you said.

Perhaps lost a little bit of share this quarter I think of the full year results.

And how much share you gained over the past few years.

Speaker 9: I've stated how much can show you gained over the past few years. Are you comfortable with the level of market share that you're taking in Brazil? And is there anything further that can be done there? Thank you very much.

Are you comfortable with the level of market share that you're taking in Brazil and.

Is there anything further that can be done that thank you very much.

So two questions that I think that one data we share that we've got.

Speaker 2: So two questions there. I think that one data we share, we got.

Michel Doukeris: Two questions there. I think that one data we shared, we got some questions in the last interactions about the cost base in the US. It's like the EBITDA decline that we saw so far, rough numbers, two-thirds related to the volume, one-third is more operational leverage. Of course, there is many opportunities to improve productivity. As you get less dislocation in production, you can optimize your lines, and those things are being planned and implemented, as we are always working on optimizing costs. There is work to be done. The team is working on that, and we will be capturing productivity through all the quarters as we move forward. In Brazil, I think that we are having a very good performance. Volumes performed very well in the quarter.

Some questions in there in the last interactions about the cost base in the west.

Speaker 2: some questions in the last interactions about the cost of the base in the US.

The EBITDA decline that we saw so far rough.

Speaker 2: It's like they bid the decline that we saw so far, rough numbers, two thirds related to the volume. One third is more operational leverage. And of course, there is many opportunities to improve productivity.

Rough numbers, two thirds related to the volume.

One third is more operational leverage and of course, there is many opportunities to improve productivity.

As you get less dislocation in production you can optimize your lines and those things are being planned and implemented.

Speaker 2: as you get less dislocation in production, you can optimize your lines and those things are being planted and implemented as we are always working on optimizing costs. So there is work to be done, the team is working on that and we will be capturing productivity.

As we are always working on optimizing costs. So there is work to be done. The team is working on that and we will be capturing productivity.

And while the quarters as we move forward and in Brazil, I think that we are having a very good performance.

Speaker 2: throughout the quarters as we move forward. And in Brazil, I think that we are having a very good performance.

Volumes performed very well in the quarter, we saw a slowdown in the industry during the quarter to our premium portfolio continues to towards very well our car closed brands are working well and as <unk> trends continue to be.

Speaker 2: volumes performed very well in the quarter. We saw a slowdown in the industry during the quarter too. Our premium portfolio continues to work very well. Our car plus brands are working well. And as premiumization trends continue to be in place,

Michel Doukeris: We saw a slowdown in the industry during the Q2. Our premium portfolio continues to work very well. Our core brands are working well. As premiumization trends continue to be in place, as we cycle the very strong comps that we had last year, I think that we'll continue to see market share improvements, and especially in the premium segment where we are accelerating big time, both volume and brand equity. Corona performing well, Spaten performing very well, Original growing high double digits. We are taking share on this very important segment in Brazil.

Place as we cycle the very strong comps that we had last year I think that will continue to see market share improvements and especially in the premium segment, where we had accelerating big time.

Speaker 2: as we cycle the very strong combs that we had last year. I think that we will continue to see market sharing improvements, especially in the premium segment where we are accelerating big time both volume and brand aquids. So, Corona for farming well is patent for farming very well, original growing high double digits. So, we are taking share on this very important segment in Brazil.

Both volume and brand accurate, so corona performing while Spartan performing very well audition now growing high double digits. So we are taking share on design important segments in Brazil.

Great. Thank you very much.

Thank you.

Laurence Whyatt: Great. Thank you very much.

Thank you. Our next question is coming from Edward Mundy with Jefferies. Please proceed with your question.

Michel Doukeris: Thank you.

Speaker 1: Thank you our next question is coming from Edward Mundy with Jeffries. Please proceed with your question.

Operator: Thank you. Our next question is coming from Edward Mundy with Jefferies. Please proceed with your question.

Morning, Michel morning Fernando.

First question is I'd love to get your perspective about how you think about the prices of restoring lost brand equity in particular, what are the lessons from previous Brian turnaround that Abi.

Speaker 10: Morning, Michelle. Morning, Fernando. First question is, I'd love to get your perspective about how you think about the process of restoring lost brand equity. In particular, what are the lessons from previous brand turnerans at ABI? Any examples, specifically examples you can talk to around what you did, how long it took to improve brand equity, and then how long it took to get consumers back on the side for some of these brands.

Edward Mundy: Morning, Michel. Morning, Fernando. First question is I'd love to get your perspectives about how you think about the process of restoring lost brand equity, in particular, you know, what are the lessons from previous brand turnarounds at ABI? And any examples, specific examples you can talk to, around what you did, sort of how long it took, to improve brand equity, and then how long it took to sort of get consumers back on side for some of these brands. Then the second question, just building on the point of premiumization, you know, both yourselves and, you know, one of your competitors that reported earlier this week, you know, still seeing really good premiumization within the beer category. I appreciate, you know, macro is holding up okay. There's still some sort of revenge spending going on.

Example, specific example, if you can talk to what you did for how long it took.

It's improved brand equity and then how long it took to sort of get consumers back on slide for some of these brands.

And then the second question just building on putting the <unk>, both yourselves and one of your competitors reported.

Speaker 10: And then the second question is building on point of premization, you know, both yourselves and, you know, one of your competitors that reported earlier this week. You know, still seeing really good premization within the bare category. I appreciate, you know, macro is holding up. Okay, there's still some sort of revenge spending going on. But, you know, do you think this premization will persist as you look out, you know, over the short to medium time?

This weakness still seeing really good presentation within the beer category.

Chris holding up Okay. There is still some sort of revenge spending going on but.

Do you think this presentation will persist.

Edward Mundy: You know, do you think this premiumization will persist as you look out, you know, over the short to medium term?

Over the short to medium term.

Edward Mundy: You know, do you think this premiumization will persist as you look out, you know, over the short to medium term?

Hi, Ed. Thank you for the question, let me start with the premium <unk>.

Michel Doukeris: Hi, Ed. Thank you for the question. Let me start with the premiumization one. We have repeated this based on data and the insights that we have. We see the premiumization in the beer category both having, like, a very large headroom because we have a lot of opportunity to continue to premiumize, but also a trend that is very consistent. It's consistent across the globe and it's consistent across different economic cycles. We even shared with you before that in some recessionary scenarios, when consumers are more under pressure, you see rather an acceleration because people, they concentrate their purchasing power in categories where they can buy more with less, let's say. It's more affordable to premiumize in beer than it is with some other categories. We see very consistent results like China, South America, Middle Americas, North America continues to premiumize.

Speaker 2: Hi, thank you for the question. Let me start with the pre-munization one. We...

We.

I have repeated.

Based on data.

Insights that we have we see the premium amortization in the beer category, both having like a very large head room, because we have a lot of opportunity to continue to prune a knife.

Speaker 2: this based on data and the insights that we have. We see the premonization in the beer category both having like a very large headroom because we have a lot of opportunity to continue to premonize, but also a trend that is very consistent. It's consistent across the globe and it's consistent across different economic cycles. And we give them.

But also a trend that is very consistent is consistent across the globe and is consistent across different economic cycles and we even.

Shared with you before that in some recessionary scenarios when consumers are more under pressure you see a rod that acceleration because people they concentrate their purchase power in categories, where they can buy more with less let's say so.

Speaker 2: shared with you before that in some recessionary scenarios when consumers are more under pressure, you will see a rather acceleration because people they concentrate.

Speaker 2: there are purchase power in categories where they can buy more with less, let's say. So it's more affordable to pre-mionize in beer than it is with some other categories. And we see very consistent results like China.

Our affordable to premium Nizing beer than EV as with some other categories and we see vertical systems results like China, South America Middle America, North America continues to prevail in the eyes and in Europe , our portfolio is more than half today in premium brands. So <unk>.

Speaker 2: South America, Midu-America, North America continues to premonize any Europe or portfolio more than half today in premium brands. So we see consistency here. We see our brands performing very well. We announced the very strong quarter for our main global brands and they perform it very well across

Michel Doukeris: In Europe, our portfolio is more than half today in premium brands. We see consistency here. We see our brands performing very well. We announced a very strong quarter for our main global brands, and they performed very well across the globe. When you think about the brand backwards, I think that these stories, they are very similar, yet each and every one is different. As a company in the US, we are listening and actively engaging with our consumers. We learned a lot through these interactions so far. As I shared during the webcast, people still have good memories, favorable. The brands still have a very high accuracy, but people basically, they want to enjoy their beer without a debate. They want us to focus and concentrate in platforms that all consumers love. This is what we're doing.

So here, we see our brands performing very well.

We announced a very strong quarter for our main global brands and they performed very well across the globe. When you think about the burn back with I think that Theres a story as they are.

Speaker 2: When you think about the brand-back with, I think that these stories, they are very similar. Yeah.

Very similar yet each and everyone is different and as a company in the U S. We are listening and actively engaging with our consumers. We learned a lot through these interactions so far and as I shared in the webcast is people are still with good memories.

Speaker 2: Each and everyone is different. And as a company in the US, we are listening and actively engaging with our consumers. We learned a lot through these interactions so far. And as I shared on the webcast is, people still with good memories, favorable. The brands still have a very high equity, but people basically, they want to enjoy their beer without a debate. They want us to focus on concentrate.

Favorable the brands still have a very high accurate, but people basically they want to enjoy their bid without the debate.

Want us to focus and concentrate.

In platforms that all consumers.

And this is what they are doing we are investing behind the platforms that we have engagement throughout the years with our consumers. The response for both communication advertisement they advance and platforms that we are activating is good and unit.

Speaker 2: in platforms that all consumers love. And this is what they're doing. We are investing behind the platforms that we have engaged throughout the years with our consumers. The response.

Michel Doukeris: We are investing behind the platforms that we have engaged throughout the years with our consumers. The response for both communication, advertisement, the events, and platforms that we are activating is good. You need time, so you can get better reading and better results. We have three months so far since this situation, and we continue to learn, and we continue to move forward with the main activities that we know that work everywhere, including in our regions in the US. Different responses in different regions, but some very good responses across brands.

Speaker 2: for both communication and advertisement.

Speaker 2: The events and platforms that we are activating is good and you need time so you can get better reading and better results. We have three months.

Time, so we can get better reading and better results, we have three months.

So far since the situation and we continue to learn and we continue to move forward with the main activities that we know that work.

Speaker 2: so far since this situation and we continue to learn and we continue to move forward with the main activities that we know that work everywhere including in our regions in the US. Different responses in different regions but some very good responses across brands.

Everywhere, including.

In our regions in the U S different responses in different regions, but some very good responses across brands.

Okay. Thank you.

Thank you. Our next question is coming from Jeff Stent with Bnb Powerbar. Please proceed with your question.

Jeff Stent: Okay. Thank you.

Edward Mundy: Okay. Thank you.

Speaker 1: Thank you, our next question is coming from Jeff Stent with DNB Paraba. Please proceed with your question.

Operator: Thank you. Our next question is coming from Jeff Stent with BNP Paribas. Please proceed with your question.

Hi.

Just one question from me if I may.

Jeff Stent: Hi. Just one question from me, if I may. There seems to be some quite radical tax changes progressing through the Brazilian Congress. I was just wondering if you could perhaps comment on those in the context of your business and what they might mean if they go through as proposed. Thank you.

Speaker 11: Hi, just one question from me, SMA. There seems to be some quite radical tax changes progressing through the Brazilian Congress. And I was just wondering if you could perhaps comment on those in the context of your business and what they might mean if they go through as proposed. Thank you.

That seems to be some quite radical tax changes progressing through the Brazilian Congress.

And I was just wondering if you could perhaps comment on those in the context of your business and what they might mean, if they go through as proposed thank you.

Yes.

Hello, Jay.

Fernando here.

Michel Doukeris: Hello, Jeff. Fernando here. We support a tax reform that will reduce the complexity of the Brazilian tax system. A tax reform that can provide for legal certainty and, of course, does not increase the industry's tax burden. Because if you look where it's probably among the highest, if not the highest aggregated tax burden in Latin America. The proposed changes which are being debated in the Congress for direct and indirect tax gained momentum this year. It was listed as top priority from the new government, and it was approved in the Congress in July, and now is at the Senate to be approved or to see how they deal with that. The proposal will simplify a lot the tax system that we have, which is good.

Fernando Tennenbaum: Hello, Jeff. Fernando here. We support a tax reform that will reduce the complexity of the Brazilian tax system. A tax reform that can provide for legal certainty and, of course, does not increase the industry's tax burden. Because if you look where it's probably among the highest, if not the highest aggregated tax burden in Latin America. The proposed changes which are being debated in the Congress for direct and indirect tax gained momentum this year. It was listed as top priority from the new government, and it was approved in the Congress in July, and now is at the Senate to be approved or to see how they deal with that. The proposal will simplify a lot the tax system that we have, which is good.

We support the tax reform that will reduce the complex just the Brazilian system.

Speaker 2: Hello, Ja. Fernando here. We support a tax reform that we reduce the complex just the Brazilian tax system. A tax reform that can provide for legal certainty and of course does not increase the industry's tax burden. Because if you look, it's probably among the highest, if not the highest, aggregated tax burden in Latin America.

Opex reform that can provides for legal certainty and of course does not increase the English tax burden because <unk> is among the highest if not the highest aggregate the tax burden in Latin America.

The proposal changes, which have been debating the comverse.

Speaker 2: The proposed changes which have been debating the converse for direct and indirect tax.

Four byte exiting directx.

<unk> momentum this year and to US listed a top priority from the new government and it was proven in the in the Congress in July and now is.

Speaker 2: The game at the moment on this year, it was a little of top priorities from the new government. And it was approved in the Congress in July . And now it's at the Senate to be approved or to see how they do it then.

Is that the senate to be to be to be approved with our two to see how they deal with that.

The proposal will simplify a lot the tax system that we have which is good.

Speaker 2: The proposal will simplify a lot the text system that we have, which is good. It's going to have a dual VAT with both a federal and state one. And this simplifies in a meaningful way the current consumption text system. And there is a

We're going to have a dual <unk> with both a feathered on our stage one and this simplified in a meaningful way in the current consumption tax system.

Michel Doukeris: It will have a dual VAT with both a federal and a state one, and this simplifies in a meaningful way the current consumption tax system. There is an excise tax that applies to some services and goods, and this kind of has not been defined, but it's gonna be defined later on. This is pretty much the indirect side. On the direct side, it still has to be discussed. Overall, I think we need to see them both combined. If there is any simplification, less uncertainty, I feel net-net should be a positive for the industry and a positive for the country.

Fernando Tennenbaum: It will have a dual VAT with both a federal and a state one, and this simplifies in a meaningful way the current consumption tax system. There is an excise tax that applies to some services and goods, and this kind of has not been defined, but it's gonna be defined later on. This is pretty much the indirect side. On the direct side, it still has to be discussed. Overall, I think we need to see them both combined. If there is any simplification, less uncertainty, I feel net-net should be a positive for the industry and a positive for the country.

And there is an excise tax.

That apply to some services and good in this kind of a has not been define it but it's going to be the funded later. So this is pretty much being direct side on the direct side is still have to be discussed.

Speaker 2: that apply to some services and good and this kind of has not been defined but it's going to be defined later on. So this is pretty much the indirect side. On the direct side is still have to be discussed and overall I think we need to see they both combined but there is a simplification. Lesson certainty. I feel that net should be a positive for the industry and a positive for the country.

And overall I think we need to see the both combined it but if there isn't a simplification.

Less uncertainty through net net should be a positive for the industry and a positive for the country.

Thank you.

Jeff Stent: Thank you.

Thank you. Our next question is coming from the line of Jared <unk> with J P. Morgan. Please proceed with your question.

Operator: Thank you. Our next question is coming from the line of Jared Dinges with JP Morgan. Please proceed with your question.

Operator: Thank you. Our next question is coming from the line of Jared Dinges with JPMorgan. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from a line of Jared Dengis with JP Morgan. Please proceed with your question.

Hi, guys. Thanks for taking the question.

If I can come back to Mexico. Please.

Jared Dinges: Hi, guys. Thanks for taking the question. If I can come back to Mexico, please. Like, I think volumes came in a bit weaker than expected, you know, and a bit weaker than they have been for a while. I know there's some phasing that you guys called out, but can you talk about what you're seeing in terms of underlying trends in that market? You know, do you still see industry growth there in H2 and as we look towards 2024? Thanks.

Speaker 6: Hey guys, thanks for taking the question. If I can come back to Mexico, please, I think volumes came in a bit. A bit weaker than expected. A bit weaker than they have been for a while. I know there's some things that you guys called out, but can you talk about what you're seeing in terms of underlying trends in that market? Do you still see industry growth there in the second half and as you look towards 2024? Thank you.

Look I think volumes came in a bit.

Weaker than expected.

A bit weaker than they have been for a while.

I know there are some things you guys called out but.

Can you talk about what youre seeing in terms of.

Underlying trends in that market.

Do you do you still see industry growth there in the second half and as you know.

Look towards 2024.

Yeah.

Hi, Jared Michelle here. Thanks for the question, So Mexico remains an incredibly exciting market.

Michel Doukeris: Hi, Jared. Michel here. Thank you for the question. Mexico remains an incredibly exciting market with a lot of energy around the beer category that is both growing and premiumizing. When you look to the quarter, I think that is always good to focus, but also step back. In this quarter, we have couple of shifts. The most important one is Easter, right? We had earlier Easter, so some of the volume phased it into Q1 versus what was last year, a later Easter, and all the volume was inside the Q2 last year. The comps here are important.

Speaker 7: I Jarrod Michele here, thank for the question. So, Max School remains an incredibly exciting market.

We have a lot of energy around the beer category.

Speaker 7: with a lot of energy around the beer category that is both growing and premonizing.

That is both growing and premium nice.

And when you look to the quarter I think that is always good to focus but also step back.

Speaker 3: And when you look to the quarter, I think that is always good to focus, but also stay back. In this quarter, we have a couple of sheep. It's the most important one is Easter. Right. So we had earlier Easter. So some of the volume phase it into quarter one.

In this quarter, we have couple of shifted the most important one is Easter.

So we had the earlier Easter so some of the volume phase <unk> to quarter one.

Versus what was last year, a later Easter and all the volume was inside the quarter two last year. So the comps here.

Speaker 3: versus what was last year, a later Easter, and all the volume was inside the quarter two last year. So the comps here are important. The second component is like...

Are important the second component is like.

Two sides of the same coin component because as they effects appreciates in Mexico. The Mexican peso, we see the remittances from the U S to Mexico continue to grow in a healthy way and this is a very important component on the Mexican.

Michel Doukeris: The second component is like two sides of the same coin component because as the peso appreciates in Mexico, we see the remittances from the US to Mexico continue to grow in a healthy way, and this is a very important component of the Mexican economy. Because the peso is appreciating, which is very good for us in terms of translation, of course, in local pesos, the remittances are not as big as they were last year. This definitely is bringing, in combination with the inflation, a short-term pressure on the consumer purchasing power. Then we also saw, as in other regions, a little bit colder weather throughout the quarter too. It bounced back at the end of the quarter, so the end of June was slightly better.

Speaker 3: of the same coin component because as they affect

Speaker 3: appreciate in Mexico the Mexican peso

Speaker 3: We see the remittances from the US to Mexico continue to grow in a health way, and this is a very important component on the Mexican economy, but because the peso is a...

Economy, but because the payers is appreciating.

Which is very good quarters, the EBITDA translation of causing local pesos. The remittances are not as big as they were.

Speaker 3: which is very good for us in a bit of translation. Of course, in local pesos, the remittances are not as big as they were last year. So this definitely is bringing in combination with the inflation a short term pressure on the consumer purchase power. And then we also saw as in other regions, a little bit colder water through all the quarters.

Last year. So this definitely is bringing in combination links to the inflation of short term pressure.

Pressure on the consumer purchasing power and then we also saw as in other regions, a little bit colder weather throughout the quarter too.

Bounce it back at the end of the quarter. So the end of June was slightly better but the beginning April may was a little bit colder than usual it is which is el Nino <unk> transition, but.

Speaker 3: Bonsed back at the end of the quarter, so the end of June was slightly better. But the beginning, April May, was a little bit colder than usually it is, which is El Nino La Minha transition.

Michel Doukeris: The beginning, April, May, was a little bit colder than usually it is with this El Niño, La Niña transition. Nevertheless, confident with the market. Long-term trends in the industry, very healthy. Premiumization in place. We are outperforming the industry, and the portfolio is very healthy, responding very well. Very strong demand for our brands in Mexico.

Nevertheless, confidant to if the market long term trends in the industry at very healthy criminalization in place we are.

Speaker 3: But never the last, confident with the market, long-term trends in the industry. It's very healthy, criminalization in place.

Outperforming the industry and the portfolio is very healthy responding very well very strong demand for our brands in Mexico.

Speaker 3: We are outperforming the industry and the portfolio is very healthy, responding very well, very strong demand for our friends in Mexico.

That's perfect. Thank you.

Simon Hales: That's perfect. Thank you.

Jared Dinges: That's perfect. Thank you.

Thank you. Our next question is coming from the line of Sanjay <unk> with Credit Suisse. Please proceed with your question.

Operator: Thank you. Our next question is coming from the line of Sanjeet Aujla with Credit Suisse. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from a line of Sanji, Auevo with Credit's Feast. Please visit with your question.

Hey, Michelle Fernando couple from me. Please firstly I think you alluded to some.

Sanjeet Aujla: Hey, Michel, Fernando. A couple from me, please. Firstly, Fernando, I think earlier you alluded to some potential tailwinds from the current commodity and exotic environment. I just wanted to get a sense in that context, what's your pricing philosophy as we look forward to some of those tailwinds? Would you look to maybe reinvest some of those tailwinds back into pricing to build volumes? Or would you look to continue to price in line with inflation across the geographies? That's my first question.

Speaker 12: Firstly, remember I think earlier you alluded to some potential tailwinds from the current of the Model PNX, ethics environment. I just wanted to get a sense in that context. What's your pricing?

Some potential tailwind from the current commodity.

The environment.

Wanted to get a sense in that context, what's your pricing philosophy.

As we look forward.

Just some of those total wins.

Would you would you look to maybe reinvest some of those turbines back into pricing volumes or would you be able to continue to place.

Nickel two geographies Thats My first question.

Hi, Michelle.

Michelle here.

Michel Doukeris: Hi, Sanjeet. Michel here. We had a little bit of breakup on the line, but I think that I got your question. As Fernando was saying before, we see at the back end of this year, commodities coming back a little bit in price. The visibility we have now with 6, 7 months under our belt is that this trend extends, towards 2024. We saw that different regions, we said this before, they got the impacts of these commodities differently, right? LatAm, for example, is already getting out, while some other regions like Europe and Africa is still, a little bit in the middle of the headwind in commodities. In terms of pricing, I think that long term, as we always say, we expect the price to move with inflation. We discussed this before.

We had a little bit of a breakup on the line, but I think I got your question. So as Fernando was saying before we see at the backend of this year.

Speaker 3: We had a little bit of break up on the line, but I think that I got your question. So as Fernando was saying before, we see at the back end of this year, Commodity.

Commodities coming back a little bit in price and the visibility. We have now we have six seven months under the belt is that this trend extends.

Speaker 3: coming back a little bit in price. And the visibility we have now with six, seven months under the belt is that this trend extends towards 2024. And we saw that different region.

Towards 'twenty 'twenty four.

And we saw that different regions.

We said this before they got the impacts of this commodity differently right. So locked down for example is already getting out while some other regions like Europe and Africa is still a little.

Speaker 3: We said this before they got the impacts of this commodity differently right so lifetime for example is already getting out

Speaker 3: while some other regions like Europe and Africa still live within the middle of the headwind income order.

A little bit in the middle of that debt had waned income audits.

In terms of pricing I think that long term as we always say, we expect the price to move with inflation.

Speaker 3: And in terms of pricing, I think that long-term, as we always say, we expect the price to move with inflation.

We discussed this before because of their high impact of commodities and the high inflation, we have been playing a little bit of catch up over the last two years margins are not back but as commodities start to go back we should see some margin and rebuild.

Speaker 3: We discussed this before because of their high impact of commode

Michel Doukeris: Because of the high impact of commodities and high inflation, we've been playing a little bit of catch up over the last two years. Margins are not back, but as commodities start to go back, we should see some margin rebuild. Of course, the investments that we are making in our brands and the long-term strategy will continue to be a priority while we expect prices to move long term with inflation, margins to rebuild to pre-COVID. If this tailwinds get confirmed for the H2 of next year, we should see some of this materializing next year.

Speaker 3: and high inflation has been playing a little bit of catch up over the last two years. Margin's

Speaker 3: But S-Comod has started to go back. We should see some margin rebuild.

Of course, the investments that we're making in our brands in the long term strategy will continue to be a priority. While we expect prices to move long term inflation markings to rebuild took pre COVID-19.

Speaker 3: And of course, the investments that we are making in our brand and the long-term strategy will continue to be a priority while we expect prices to move long-term inflation, margins to rebuild, to pre-COVID. And if this

And if this.

<unk> get confirmed for the second half of next year.

Speaker 3: Teyawines get confirmed for the second half of next year. We should see some of these materializing next.

We should see some of that is materializing next year.

Got it thank you.

Just just a word on China.

Sanjeet Aujla: Got it. Thank you. Just a word on China. Now we've seen some reopening come through in the Q2 numbers. How do you assess the steady state of the Chinese consumer at the moment?

Speaker 12: Got it, thank you. And just a word on China, now we've seen some reopening come through in the Q2 numbers. How do you set the steady state of the Chinese consumer at the moment?

Now we've seen.

Some reopening come through in the Q2 numbers, how do you set the steady state of the Chinese continue on at the moment.

Well that's interesting.

<unk>.

I have been a couple of times too to Asia. This is.

Michel Doukeris: Well, that's interesting. I've been a couple of times to Asia this year already and spent a good time with consumers. We see, like, a steady recovery after the COVID. Remember that we discussed this last year a couple of times, that we were disproportionately impacted by the lockdowns because there was a lot of lockdowns in the east of China, but also a lot of channel impact on our nightlife, Chinese restaurants. We saw traffic rebuilding, so good level of consumer come back to the channels. We see this impacting in a disproportional way our premium business and our presence in the more premium channels like nightlife and restaurants. Consumers, as everywhere else, they came back from the COVID experience is slightly different, so they are more demanding for their brands.

Zero already and expand in good time way with consumers.

Speaker 3: I've been couple of times to Asia this year already and spent a good time with consumers.

And we see like a steady recovery after the COVID-19.

Speaker 3: And we see like a steady recovery after the COVID. And remember that we discussed this last year, a couple of times.

And remember that we will discuss it this last year a couple of times.

That we were disproportionately impacted by the Lockdowns because there was a lot of their lockdowns in the eastern China, but also a lot of.

Speaker 3: that we were disproportionately impacted by the lockdowns because there was a lot of the lockdowns in the Eastern China but also a lot of channel impact on our night lives, Chinese restaurants.

Channel.

The impact on our nightlife Chinese restaurants.

<unk>.

We saw traffic rebuilding.

Speaker 3: We saw traffic rebuilding, so good level of consumer come back to the channels.

So good level of consumer coming back to the channels.

We see this impacting in a disproportional weight them, our premium business and our presence in the more premium channels like nightlife in restaurants.

Speaker 3: We see this impacting in a disproportionate way that our premium business and our presence in the more premium channels like nightlife and restaurants consume

Consumers as everywhere else.

They came back from the Covid experience is likely different.

Speaker 3: They came back from the COVID experiences lightly different. So they are more demanding.

So they are more demanding part of their brands they want to see more value for the money that they are expanding is a common topic in China. Now is show me the value. So it can get my money is kind of how it translate what people are saying for immunization trends in beer remains.

Speaker 3: They want to see more value for the money that they are spending. It's a common topic in China now is...

Michel Doukeris: They want to see more value for the money that they are spending. A common topic in China now is, "Show me the value so you can get my money." It's kind of how you translate what people are saying. Premiumization trends in beer remain very healthy. Consumption is moving well in our category. I know that in some other categories there is some slowdown, but beer continues to be moving well after the reopening. Summer now is an important season for the core business and the premium business. So far we've been seeing a good rate of sales, and distribution is growing as we expand the business. Our portfolio continues to perform very well in the premium, in the super premium business, which is very interesting.

Speaker 3: Show me the value so you can get my money, kind of how you translate what people are saying. Premonization trends in beer remain very healthy. Consumption is moving well in our category. I know that in some other categories, there is some slowdown, but beer continues to be moving well after the reopening.

Very healthy.

Consumption is moving well in our category and know that in some other categories. There is some slowdown but beer continues to be moving well after the reopening.

And some are now is an important season for the core business.

Speaker 3: And summer now is an important season for the core business and the premium business. So far we've been seeing a good rate of sales and distribution is growing as we expand the business. Our portfolio continues to perform very well in the premium and in the super premium business which is ?

And the premium business and so far <unk> seen.

Good the rate of sales and distribution is growing as we expand the business and our portfolio continues to perform very well in the premium and Super premium business, which is very interesting and long term, we know that the prospects of China is.

Michel Doukeris: In the long term, we know that the prospects of China is continued premiumization, and we are very well positioned with our portfolio to continue to benefit from that.

Speaker 3: And long term, we know that the prospects of China is...

Premium amortization.

And we are very well positioned with our portfolio to continue to benefit from that.

Speaker 3: Continued pre-immunization and we are very well positioned with our portfolio to continue to banister on that

Great. Thank you very much.

Richard Withagen: Great. Thank you very much.

Sanjeet Aujla: Great. Thank you very much.

Thank you. Our next question is coming from the line of Richard with a gin with Kepler. Please proceed with your question.

Operator: Thank you. Our next question is coming from the line of Richard Withagen with Kepler. Please proceed with your question.

Speaker 1: Thank you. Our next question is coming from the line of Richard Withergen with Kepler. Please proceed with your question.

Hey, good morning.

Fernando I've got two questions. Please first of all.

Speaker 13: Good morning, Michelle, the morning phenomenon. I've got two questions, please. First of all, in deep press release, you mentioned that you attracted more lower income groups in Latin America, in Africa, to brands and pack innovations. So can you give some more details about this? Is this a response to a more difficult circumstance? For consumers, for example, at the result of the inflation that we see?

Richard Withagen: Yeah. Good morning, Michel. Good morning, Fernando. I've got two questions, please. First of all, in the press release, you mentioned that you attracted more lower income groups in Latin America and in Africa through brand and tech innovations. Can you give some more details about this? Is this a response to a more difficult circumstance for consumers, for example, as a result of the inflation that we see? The second question, probably for Fernando, on the working capital, especially your receivables and your payables, were a big drag on free cash flow in H1 2023. Can you talk a bit, what is behind the adverse effect here and what are your expectations are for H2?

In the press release, you mentioned that you attracted more lower income groups in Latin America and in Africa through brands and Tech innovations. So can you give some more details about this and is this a response to a more difficult circumstance for consumers for example, as a result of the inflation that we see.

And then the second question probably for Fernando.

Speaker 13: And then the second question, probably for Fernando, on the working capital, especially your receivables, and your payables were big drag on free cash flow in the first half of 23. So can you talk a bit what is behind the adverse effect here and what your expectations are for the second half of the year?

On the working capital.

Specialty your receivables and our payables were a big drag on free cash flow in the first half of 'twenty three.

So can you talk a bit.

It is behind the.

Petros effect here.

And what are your expectations are for the second half of the year.

Okay.

Hey, Richard Michelle here I'll take the first question and then hand, it over to Fernando <unk>.

Michel Doukeris: Hey, Richard. Michel here. I'll take the first question and then hand it over to Fernando. We've been talking through the last two quarters and since our capital markets day in 2021 about growing the category and implementing solutions that we know that work across the globe, that we tested in the last few years, and we are scaling up. Let me give you one example to quickly address that. In Brazil, we are combining three things that are very important for us to increase participation and more occasions in the category. A very strong core portfolio with the Brahma, Skol, Antarctica brands, returnable packaging that we know that makes the product more affordable for consumers, and the convenience of Zé Delivery with the home delivery of cold beer in 30 minutes.

So we've been talking through the the last two quarters <unk> seen soar.

Market capital day.

In 2021 about growing the category and implementing solutions that we know that work across the globe that we tested in the last few years and we had a scaling up so let me give you. One example to quickly address that so in Brazil.

We are combining.

Three things that are very.

Important for us to increase participation.

And more occasions in their category.

So a very strong.

Our core portfolio with the.

Coal Antarctica brands.

Returnable packaging that we know that makes the product more affordable for consumers.

And the convenience of a Z delivery with the home delivery of cold beer in 30 minutes.

So we can by combining the initiatives that we developed over the last few years.

Michel Doukeris: We can, by combining the initiatives that we developed over the last few years, increase participation, get our products to penetrate more and have higher participation from low income consumers, while continue to have very good share level, good margins and performance on our core brands. This is a little bit of what we were talking in the press release in how we are increasing participation. Of course, in different places we have different packs that address the same type of occasions, consumer base, but I think that this example from Brazil where you combine returnable package, direct to consumer delivery and strong core brands, is an example that brings to life how we are leading and growing the category. Fernando on the working capital with you.

Increased participation gap filler products to penetrate more and have higher participation from low income consumers. While continue to have very good service level, good margins and performance on our core brands. So this is a little bit of what we were talking.

In the press, releasing how we're increasing participation of quality in different places we have different packs that address the same type of occasions consumer base, but I think that this example from Brazil, where the combined returnable package.

Direct to consumer to deliver any strong core brand is an example that brings to life how.

We are leading and growing the category.

And then Fernando on the working capital with your high reach a fair number here on the working capital should topic. So you mentioned receivables receivables the biggest chunk here.

Fernando Tennenbaum: Hi, Richard. Fernando here. On the working capital, a few topics. You mentioned receivables. Receivables, the biggest chunk here is derivative receivables position, which is actually reversed in non-cash. This is like $550 million. Then we have another chunk, around $250 million, which is higher volume growth and channel mix, mostly in APAC and Middle Americas. On the payable side, you need to look at payables in conjunction with inventories, because what ended up happening is during the pandemic, as everyone is very well aware, there were all these supply chain fluctuations and ended up having more inventories than you actually needed, just to make sure that there was no issue on service level. Now we start bringing these inventories to a more healthy level.

Is is derivative receivables position, which is actually a reversal of noncash. This is like 500 $550 million. Then we have another chunk around 250, which is higher volume growth in channel mix, mostly in APAC in Middle America.

Then on the payable side is you need to look payables in conjunction with inventories because what ended up happening is doing during this pandemic as.

As everyone is very well aware there was the August supply chain fluctuations and ended up having more inventory than you actually need it just to make sure that there was no issuance servicer level now, let us start bringing these investors and these inventories to a more healthy level.

That business is that reducing inventory, but at the first moment to reduce payables and then once we start.

Fernando Tennenbaum: What happens is that reducing inventories, but at the first moment you reduce payables, and then once you start cycling that over, then you are gonna have a lower inventory level, and then you're gonna reduce some of these payables. No major concern here. As we cycle over the pandemic, we should start normalizing that, and you should see cash coming from lower inventories and the respective benefit on payables.

Cycling that over then you are going to have a lower inventory level and then you are going to reduce some of these payables. So no no major concern here and as we as we cycle over the pandemic, we should start normalizing that initiatives seeing cash coming from lower event that has ended.

Irrespective benefit in payables.

Okay.

Alright, great. Thanks, a lot.

Thank you.

Richard Withagen: Very clear. Thanks a lot.

Thank you. Our next question is coming from the line of Robert Vos with ABN Amro. Please proceed with your question.

Fernando Tennenbaum: Thank you.

Michel Doukeris: Thank you.

Operator: Thank you. Our next question is coming from the line of Robert Jan Vos with ABN AMRO. Please proceed with your question.

Yes, hi, good afternoon. Good morning, Thanks for taking the question.

Richard Withagen: Yes. Hi, good afternoon. Good morning. Thanks for taking the question. When looking at, I think it's a question for Fernando. When looking at your current bond portfolio and taking into consideration the upcoming debt redemptions, which are quite minimal, and possibly also duration of some hedged interest rates, for how long do you think you will be able to maintain an average gross debt coupon of 4%? And maybe a follow-up on the working capital question, do you expect some kind of reversal in the H2? The cash outflow was $4.6 billion in the H1. Will that in part reverse in the H2? Thank you.

Robert Vos: Yes. Hi, good afternoon. Good morning. Thanks for taking the question. When looking at, I think it's a question for Fernando. When looking at your current bond portfolio and taking into consideration the upcoming debt redemptions, which are quite minimal, and possibly also duration of some hedged interest rates, for how long do you think you will be able to maintain an average gross debt coupon of 4%? And maybe a follow-up on the working capital question, do you expect some kind of reversal in the H2? The cash outflow was $4.6 billion in the H1. Will that in part reverse in the H2? Thank you.

When looking at it I think it's a question for Fernando when looking at your current bond portfolio and taking into consideration the upcoming debt redemptions, which are quite minimal and possibly also duration of some hedged interest rates for.

How long do you think you will be able to main maintain an average gross debt coupon of 4% and maybe a follow up on the working capital.

Question do you expect some kind of reversal in the second half. So the cash outflow was $4 6 billion in the first half will debts in parts and reverse in the second half. Thank you.

Hello, Robert Thanks for your question.

Michel Doukeris: Hello, Robert. Thanks for your question. On the bond portfolio, what is quite interesting is that it's a fixed rate bond portfolio, and now with interest rates rising, what we ended up doing is that, as we generate cash and that's for deleveraging and taking the opportunity to buy back some debt outstanding, we're actually. You get more return on our cash when you buy the highest coupon debt. Since we don't have to borrow money in this new interest rate environment and are retiring, as we retire debt, they're actually supportive for our 4% coupon. We should be continuing to do that, and no concerns on maintaining the 4% coupon here.

On the bond portfolio, what is quite interesting is that it's a fixed rate loan portfolio.

And now we think the rest rates rising.

What we ended up doing is that as we generate cash and that was due to leveraging in and taking the opportunity to buy back some debt outstanding we had actually you'll get more and more return of our cash when you buy the highest coupon debt since we don't have to borrow money in this new interest rate environment than a retiring as we return.

That actually is supportive for our for our 4% coupon. So we should be continuing to do that.

And so no no concerns on maintaining the 4% coupon here.

On your second question, yes.

As we explained at the moment there is start normalizing our inventory levels any stock.

Michel Doukeris: On your second question, yes, as we explained it, the moment that you start normalizing your inventory levels and you start having the lower inventories, but building back some of the payables, you could expect to have some of the reverse on that. We always remind that most of our cash flow is generated in H2 of the year, and the working capital component is very important to that.

Adding the lower inventories, but building back some of the payables you could expect to have some of the reversal that we always remind that the most of our cash flow in the second half of the year and their working capital component is very important to that.

Very clear thank you.

Thank you.

Simon Hales: Very clear. Thank you.

Robert Vos: Very clear. Thank you.

Thank you our last question today will come from the line of Simon Hales with Citi. Please proceed with your question.

Michel Doukeris: Thank you.

Operator: Thank you. Our last question today will come from the line of Simon Hales with Citi. Please proceed with your question.

Thank you Harsha.

That's a difficult thing for me then.

Simon Hales: Thank you. Hi, Michel. Hi, Fernando. Just a couple of things from me then. I just wanna come back to the US sort of lead. One of your major competitors has been highlighting an acceleration in the number of US retailer shelf resets it's seeing. I mean, is that something you can confirm you're experiencing? Perhaps how are you preparing for a further step up in shelf resets as we move into the fall? Secondly, I wonder if you could just talk a little bit about the support you've been providing to your US wholesaler partners through Q2, and what support we should expect to continue to see with wholesalers in Q3 and beyond.

Come back to the U S.

Please.

One of your major competitors has been highlighting and acceleration of the number.

U S retail.

Is that something you can confirm you're experiencing and how are you preparing for.

Sure.

We need to be.

Paul.

Then secondly, if you can.

Talk a little bit about the support you've been providing to your U S wholesale partners.

<unk>.

What support we should expect to continue to see going forward.

And beyond.

ISI. Thank you for the question I think I got the two questions here in terms of shelf resets.

Michel Doukeris: Hi, Simon. Thank you for the question. I think I got the two questions here. In terms of shelf resets, different in each country and by retailer, but as an average in the US, you have two periods of the year, fall and spring. Usually during the fall, you see 20% of the retailers, let's say, resetting, while the majority of the resets take place in the spring. We saw some activity now towards the fall, a little bit off cycle, but smaller activities, so a third or a fourth of the 20% of the retailers already doing some adjustments.

Different in each country and by retailer but.

There's an averaging the WAC to have two periods of the year.

Spring.

Usually during the fall you see <unk>.

80% of the retailers, let's say resetting while the majority of the resets take place in this spring we saw some activity now towards the fall a little bit off cycle, but just smaller activities. So third data.

Four of the 20% of the retailers already doing some adjustments.

And there is a huge planning on both sides like retailers and wholesalers, we worked throughout the year to make sure that the shelf set optimize it in the best possible way with the retailers of course always making.

Michel Doukeris: There is a huge planning on both sides, like retailers and us and wholesalers. We work throughout the year to make sure that the shelves are optimized in the best possible way with the retailers, of course, always making the last call on how they organize shelves and set for their consumer demand and needs. In terms of the wholesaler support, we have this long-term partnership with our wholesalers. Of course, objectives pretty much aligned in here in maximizing our interests, combining our sales and operations as much as we can, for optimization. Given the situation in the US, we thought that would be extremely important to extend support to our wholesalers, link it to their volume sales. As we announce it to them, it goes until the end of the year.

The last call on how they're organized shelves and staff for their consumer demand and need.

In terms of the wholesaler support we have this long term partnership referral wholesalers.

Of course objectives pretty much aligned adhere and maximizing our interests.

Combining our sales and operations as much as we can.

Product utilization and given the situation in the U S. We thought that would be extremely important to extend.

Support to our wholesalers Lincoln to their volume of sales and as we announced it to them.

<unk> until the end of day or so is the same support from June until December and.

Michel Doukeris: It's the same support from June until December. Very important as we bridge the situation here, and we maintain our wholesalers competitive and focused on what they do best, which is high quality service level for their customers and making sure that we are bringing moments of joy to our consumers through our brands, platforms, and activations that we have. Thank you for the question.

Very important as we bridge the situation here and we maintain our wholesalers competitive and focused on what they do best which is high quality service level for their customers and making sure that we're bringing moments of joy to our consumers through our brands platforms and.

<unk> that we have.

Thanks for the question.

Thank you.

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. Michel do Paris for closing remarks.

Simon Hales: Thank you.

Operator: 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. Michel Doukeris for closing remarks.

Thank you Jeff. Thank you for all for your time today and ongoing partnership in support for our business opioid stay safe and well. Thank you.

Michel Doukeris: Hey, thank you, Jess. Thank you everyone for your time today and ongoing partnership and support for our business. Hope you all stay safe and well. Thank you.

Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.

Operator: Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines and have a wonderful day.

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