Anheuser-Busch InBev SA/NV (ABI) Earnings Call Transcript & Summary

[Foreign Language] Ladies and gentlemen, dear shareholders, welcome to the Annual Shareholders' Meeting of AB InBev here at the company's headquarters in Leuven, Belgium. In light of the COVID-19 pandemic and the resulting measures and restrictions imposed by governments, the format of this year's meeting is different from other years. In particular, as announced in a press release on May 19, 2020, and as provided by the Belgian Royal Decree no. 4 of April 9, 2020, the company has decided to conduct today's meeting without the in-person attendance of shareholders and proxy holders. Certain members of the bureau of the shareholders' meeting, including Mr. Martin Barrington, the company's Chairman, are attending the meeting remotely by teleconference. Today's meeting is being recorded and will be made available on the company's website after the meeting. As permitted by the Belgian Royal Decree no. 4 of April 9, 2020, the company elected that shareholders could only vote in writing ahead of the meeting or by proxy with an express voting instruction granted to Mr. Jan Vandermeersch. However, valid proxies granted to another proxy holder with express voting instructions have been recorded and will be taken into account for quorum and majority purposes without such proxy holder attending the meeting. I now pass the floor to the Chairman for an introductionary message and to formally open the shareholders' meeting.

Thank you, Mr. Carnewal, and welcome to all. On behalf of the Board of Directors, we thank all our shareholders for their flexibility, and we hope that everyone is safe and healthy. The COVID-19 pandemic is presenting unprecedented challenges, impacting everyone's lives in many ways. However, it has not changed who we are or what we stand for at AB InBev. Our purpose remains more relevant than ever, bringing people together for a better world. Today, that means joining efforts to prioritize each other's health and safety, helping our communities where we can and supporting our operations. We are proud to see our colleagues around the world working tirelessly with our partners, retailers, bars and restaurants to support their long-term business success and find new ways to connect with our consumers. The commitment, ingenuity and sense of urgency of our people will continue to take us forward. As required by the pandemic, we have adapted the meeting's format such that it is being held without our traditional in-person interaction with shareholders. Thus, our Q&A session will consist of questions we've received from shareholders ahead of the meeting. We thank you for these questions and for your understanding. We very much look forward to our shareholders' meeting next year, where we hope that we can once again be together in person. At this time, I declare the 2020 Annual Shareholders' Meeting open and ask our notary, Mr. Carnewal, to proceed with the usual formalities.

Constitution. In accordance with Article 36 of the bylaws, the bureau of the meeting has been validly constituted before the opening of the meeting by appointing the following persons: Mr. Jan Vandermeersch, Global Legal Director, Corporate, has been appointed as secretary of the meeting. And Mrs. Ann Randon and Mrs. Ingvild van Lysebetten have been appointed as scrutinizers. Verifications made by the bureau. During and following the completion of the formalities for registration of the attendees, the bureau verified the following in view of the constitution of the shareholders' meeting: a, the proof of the publication of the convening notice to this shareholders' meeting in the Belgian Official Gazette and in the press were presented to the bureau. The bureau has verified that the publication dates of these notices are the following: Belgian Official Gazette of April 28, 2020; and De Tijd and L'Echo of April 28, 2020. B, the text of the convening notice and accompanying forms were also made available to the shareholders on the company's website as from April 28, 2020. A press release and revised version of the convening notice taking into account the fact that the meeting is held without the in-person attendance of shareholders in accordance with the Belgian Royal Decree no. 4 of April 9, 2020, was available on May 19, 2020. And C, the bureau has also verified that a copy of the convening notice was sent to holders of registered shares as well to the directors and the statutory auditor of the company. Documents made available to participants. The Bureau has also verified that the company has taken the necessary steps to enable the participants to consult to the documents related to the meeting as provided by Article 3:35 and 7:148 of the Belgian Code of Companies and Associations. Verification of the powers of the persons participating in the meeting. The dematerialized share certificates of ownership on record date, the notifications of attendance made by the holders of registered and dematerialized securities, the forms for vote by correspondents as well as proxies received by the company with express voting instructions were submitted to the bureau for the purpose of verifying compliance with the rules of participation at the meeting. Attendance list. An attendance list has been established, indicating the shareholders who have voted in writing in accordance with Article 35 of the Articles of Association as well as the shareholders who have signed proxies with express voting instructions. Verification of the quorum. The bureau has verified from the attendance list that the shareholders attending the meeting or represented at the meeting hold 1,521,581,699 shares out of a total of 2,019,241,973 issued and outstanding shares of the company. As a result, the bureau has verified that the meeting has a valid quorum and can properly deliberate on those items on the agenda that require such quorum and a fortiori on all other items of the agenda which do not require any quorum. Third parties attending the meeting. In addition to the persons referred to before and following -- the following persons are present at the meeting either in person or remotely by telepresence: Mr. Carlos Brito, Chief Executive Officer; Mr. Fernando Tennenbaum, Chief Financial Officer; Mr. John Blood, Chief Legal and Corporate Affairs Officer and Corporate Secretary; Mr. Koen Hens, representative of PwC, statutory auditor of the company; and employees of the company and consultants hired by the company who are carrying out logistical tasks relating to the meeting. The end of the verifications of the powers. The shareholders' meeting acknowledges that it is validly constituted to deliberate upon the items on the agenda. The agenda of the meeting is the following. A, for the extraordinary shareholders' meeting: one, amending Article 24.4 of the Articles of Association to allow the Board to decide by way of written resolutions under the conditions of the Belgian Code of Companies and Associations; two, amending Article 44 of the Articles of Association to allow the Board to distribute interim dividends under the conditions of the Belgian Code of Companies and Associations; three, amending several provisions of the Articles of Association to conform such provisions with the changes imposed by or resulting from the rules of the Belgian Code of Companies and Associations and other Belgian legislations to align the text of the Articles of Association with the terminology and numbering of such code. B, for the ordinary shareholders' meeting: four, management report by the Board of Directors on the accounting year ended on the 31st of December 2019; five, report by the statutory auditor on the accounting year ended on the 31st of December 2019; six, communication of the consolidated accounts; seven, approval of the statutory annual accounts for the accounting year ended on the 31st of December 2019 and allocation of the results; eight, discharge to the directors; nine, discharge to the statutory auditor; ten, appointment of directors; eleven, approval of the remuneration report and the executive remuneration policy of the company. C, powers: twelve, granting of powers to Mr. Jan Vandermeersch to proceed with the filings required under Belgian law.

Thank you, Mr. Carnewal. I now introduce our CEO, Carlos Brito, who will make a business presentation. Brito, you have the floor.

Thank you, Marty. Good afternoon. I hope you and your families are safe and well. Before we start, I must draw your attention to the legal disclaimers here, which I don't propose to read out now as they are available on our website for you to read. Please note that the information presented today is in line with what we disclosed at the time of the publication of our 2019 full year results on February 27 and the publication of our 2020 first quarter results on May 7. Today, I'll be taking you shortly through the results and highlights of 2019. I'll then cover some key elements of our 2020 first quarter performance and give you an overview of the actions we have taken in light of the COVID-19 pandemic. So let's start with the highlights of 2019. Our performance in 2019 was below our expectations, and we're not satisfied with the results. There were many successes, but we also faced many challenges. In 2019, we took steps to evolve our revenue growth to be more balanced between volume and revenue per hectoliter, which is critical to long-term sustainable top and bottom line growth. We grew volumes by more than 1%, our third consecutive year of volume growth with the rate of growth accelerating each year. This contributed to a strong and balanced top line growth led by a broad set of markets, including Brazil, Mexico, Colombia and South Africa. We saw an improved performance from the U.S., our largest market, which delivered revenue and EBITDA growth and improving market share trends. We made significant progress towards deleveraging commitments, resulting in a leverage ratio of 4x at the end of the year, accounting for the proceeds from the divestments of the Australian operations while excluding the last 12 months' EBITDA from the Australian operations. That being said, 2019 was not without its challenges. We faced significant headwinds in our cost base driven primarily by the highest annual increase in commodity and transactional currency costs in the past decade, which held back EBITDA growth by approximately 200 basis points. We also faced challenging macroeconomic environments in many of our markets, including Brazil, Argentina, South Africa and South Korea, leading to consumer trade down and consumption contraction. Additionally, our performance in the second half was impacted by softness in the nightlife channel in China, our most profitable channel in the country and where our portfolio overindexes. Let me now take you through the results of the year. In 2019, we delivered a more balanced top line growth with revenue up 4.3%, revenue per hectoliter up 3.1% and total volumes up 1.1%. Our beer volumes grew by 0.8% led by our premium portfolio and supported by an improved performance from our core portfolio. Our non-beer business had a strong year with volumes up by 4.8% led by Brazil and Colombia. Our EBITDA grew by 2.7%, with margin contraction of 65 basis points to 40.3%. The increasing commodity and transactional currency costs held back EBITDA growth by approximately 200 basis points. Our underlying EPS decreased by $0.47 to $3.63. Our global brands Budweiser, Stella Artois and Corona continued to outperform. In 2019, they grew revenue by 5.2% and by 8.4% outside of their home markets, where they typically command a premium price point. Budweiser grew revenue by 3.3% outside of its home markets of the U.S. led by Brazil, India and Europe, where it is the fastest-growing brand in the region, partially offset by China due to softness in the nightlife channel. This performance was on top of a challenging comparable given the brand's global sponsorship of the 2018 FIFA World Cup. We continue to leverage Budweiser's strong connection with football through new partnerships with the English Premier League and La Liga, which we activated in more than 20 markets. Stella Artois delivered healthy growth of 7.7% outside of Belgium led by the U.S. and Brazil. Corona once again led the way with growth of 21% outside of Mexico, in addition to a very strong performance in its home market. Growth was broad-based with China and South Africa leading the way. The complementarity (sic) [complementary] nature of our global brands enables us to meet consumer needs in a variety of occasions and price points, minimizing cannibalization and driving overall growth of the premium segment. I'll now take you through our capital allocation priorities. The first priority for the use of cash is to invest behind our brands and to take full advantage of the organic growth opportunities in our business. Second, deleveraging to around the 2x net-debt-to-EBITDA ratio remains our commitment, and we'll prioritize that repayment in order to meet this objective. Third, with respect to M&A, we'll always be ready to look at opportunities when and if they arise, subject to our strict financial discipline and deleveraging commitment. Our fourth priority is returning excess cash to shareholders in the form of dividends and/or share buybacks. With this being said, we must exercise prudent measures during times of uncertainty and volatility, including efficient management of discretionary expenditures, especially those which may not prove effective in the current environment. Given the uncertainty, volatility and fast-moving developments of the COVID-19 pandemic in the markets in which ABI InBev operates, on March 24, we withdrew our 2020 outlook in its entirety because of the impact of such pandemic. In addition, on April 14, we announced that we are revising our proposal to pay a final 2019 dividend from EUR 1 per share to EUR 0.50 per share. We determined that this decision was prudent and in the best interest of the company and was consistent with our financial discipline, deleveraging commitments and other actions taken to navigate this environment. The Board is, therefore, proposing subject to your approval today a revised proposal to pay a final 2019 dividend of EUR 0.50 per share. Combined with the interim dividend of EUR 0.80 per share paid towards the end of last year would lead to a total dividend payment for fiscal year 2019 of EUR 1.3 per share. Now I want to take a moment to highlight the progress we have made on our 2025 sustainability goals, which we launched in March 2018. In 2019, we continued to support our farmers through agricultural development. We're working with over 20,000 farmers in 13 countries to grow the best barley, wheat, cassava, hops, maize, rice and sorghum. We set an ambitious goal that 100% of our direct farmers will be skilled, connected and financially empowered by 2025. By the end of 2019, 50% of our direct farmers were skilled, 45% were connected and 35% were financially empowered. When it comes to our water stewardship efforts, we'll leverage our partnership with The Nature Conservancy to accelerate the establishment of water funds in Argentina, Colombia, El Salvador and Mexico and support watershed protection projects in California and Colorado in the U.S. We're constantly looking for ways to increase the recycled content in our packaging and advocate for returnable solutions. We have committed that by 2025, 100% of our products will be available in packaging that's returnable or made from majority recycled content. By the end of last year, over 40% of our volume was in returnable packaging, and we had achieved 42.3% recycled content in our one-way glass bottles. Climate change has a far-reaching impact on our business and the communities in which we live and work. By the end of 2019, 61% of our purchased electricity was under contract from renewable sources. Now let's turn to 2020. Our business started the year with good momentum. We delivered volume growth of 1.9% in the first 2 months of the year, excluding our business in China, where the COVID-19 outbreak began in late January. The impact of the pandemic on our global results increased significantly toward the end of the first quarter, leading to a volume decline of 3.6%, excluding China, and a total volume decline of 9.3%. Beer volumes declined by 10.5%, while non-beer volumes declined by 0.2%. We expect that the impact on our second quarter results will be materially worse than the impact in the first quarter as evidenced by a volume decline in April of approximately 32%. Revenue declined by 5.8% in the first quarter as the volume decline was partially offset by revenue per hectoliter growth of 3.9%. Our global brands grew revenue across the majority of our markets, but their total performance was significantly impacted by declines in China, which is the largest market for both Budweiser and Corona outside of their home markets. EBITDA declined by 13.7%, with margin contraction of 331 basis points to 35.9% primarily due to the top line decline and higher cost per hectoliter resulting from operational deleverage and transactional currency headwinds. Our normalized EPS decreased to negative $0.42, while underlying EPS decreased to $0.51. I'd now like to discuss how we're living our purpose in new ways coming together with the sheer determination to prioritize each other's health and safety, build resilience in our local communities and find innovative ways to connect with our consumers and customers in this new context. Our teams in China and South Korea were the first to be impacted by this crisis. Their experiences and insights have provided best practice that are benefiting our operations around the world, helping position us for a strong recovery. We quickly implemented a cross-functional COVID-19 task force that meets virtually each day in order to maintain an open dialogue and act with agility and speed. The key priorities of our task force are providing for the safety of our people, supporting our communities and partners in safeguarding our business continuity. This structure facilitates efficient sharing of best practice across our markets to amplify the impact of new ideas as quickly as possible. As I mentioned before, our colleagues in China and South Korea generated many of the best practices that have been shared and implemented around the world. They immediately took steps to protect the health and safety of our people such as by enhancing sanitation procedures and redesigning the layouts in our breweries to enable social distancing. They also leveraged technology to keep our teams connected and engaged even from afar. Support of our communities and partners was paramount since early in the outbreak and remains very important to date. Our local teams, with the help of our global procurement team, quickly facilitated donations of masks, disinfectants and hand sanitizers to local hospitals. They also focused on providing excellent customer service to our wholesalers and retailers with proactive communication. Our commercial teams also acted quickly to allocate resources where they would be most effective, including to the off-premise and e-commerce channels. This drove meaningful results, particularly in the e-commerce channel in China, where we are the market leader. In the first quarter, we grew volumes by strong double digits in this channel and increased our market share to approximately twice that of the next brewer. The health and safety of our people is our top priority. We paid close attention to the guidelines of the World Health Organization and complied with the requirements set forth by local governments. Moreover, we have implemented additional safety measures to protect our employees. We're regularly building upon the resources available to support the physical and mental well-being of our colleagues around the world. The strength of our global business comes from our local presence. Because the majority of our ingredients and products are sourced, brewed, distributed and enjoyed locally, we're deeply connected to our communities. Together with local governments and our partners, we use our scale, capabilities and resources to support the fight against the pandemic through initiatives such as converting our operations to produce and donate more than 3 million bottles of hand sanitizer in over 25 countries; production and donation of water; mobilizing our trucks to deliver food, water and medical supplies; donating medical supplies, including more than 3 million face shields that we are manufacturing; building public health care facilities in markets such as Mexico, Colombia, Brazil and Peru; and collaborating with our sports partners and the American Red Cross in the U.S. to convert stadiums and our own [ tour ] facilities into temporary blood drive centers. As our on-premise partners faced temporary closures in most of our markets, we launched a series of tailored initiatives across 20 countries to support local pubs, bars and restaurants such as subsidizing consumer purchase of beer vouchers for future use and creating platforms to advertise local delivery options. We continue to look for new ways to support our partners so they can weather the current disruption and prepare for a strong recovery. Our culture is one of ownership and resilience even in the face of extreme adversity. I'm inspired and humbled by my colleagues around the world who are coming together, displaying tremendous agility and working tirelessly to position us for a strong recovery. Our team in China also led the way in finding innovative ways to connect with consumers who are staying home. They launched Budweiser e-clubbing program in collaboration with Tmall, where consumers can enjoy performances from local electronic dance music DJs while simultaneously ordering Budweiser online. This is part of our teams around the world to leverage consumer passion points in creative new ways such as Circuito Brahma in Brazil, a virtual country music concert series that generated 3 million live views at its first show and has accumulated of over 40 million views to date. In the U.S., Michelob Ultra continues to promote an active lifestyle through livestreamed home workouts that support local fitness studios impacted by social distancing restrictions. For the past several years, we have been investing new capabilities to better connect with our customers and consumers. Growing trends such as digital sales, e-commerce and online marketing are more relevant now than ever before and have rapidly accelerated in recent months. In many of our markets, our customers can place orders online through our B2B and marketplace platforms, which we established and significantly invested in enhancing over the past few years. This offers them the flexibility to order when and where it's most convenient while providing visibility into our full set of offerings and their past transactions. Additionally, in 2018, we created a function dedicated to our direct-to-consumer business. We have made -- we have more than 13,000 retail outlets [in] several e-commerce platforms across our markets. This allows us to better understand and connect with our consumers in a direct way, and these learnings are providing -- are proving incredibly useful in today's context. We believe the significant progress we have made in areas such as B2B sales and e-commerce puts us in an advantaged position to capture growth from these trends. Our commitment to financial discipline is unwavering, especially in the context of the current volatility. We're proactively managing those factors upon which we have impact and influence, optimizing our cost base as part of our DNA and a primary driver of our industry-leading profitability. We have implemented several measures to reduce or eliminate any discretionary spending that may not prove effective in the current environment. This includes noncommitted capital expenditures; variable administrative expenses such as travel and events; packaging renovations and sales and marketing investments, including sponsorships. Additionally, our senior leadership team has volunteered to reduce their salaries by 20% since May and for the remainder of the year. As discussed earlier, we also reviewed our proposal to pay a final 2019 dividend from EUR 1 per share to EUR 0.50 per share, subject to your approval today. We have also taken proactive measures to maintain our strong liquidity position, including drawing down our USD 9 billion revolving credit facility in full and successfully issuing approximately USD 11 billion of bonds. Moreover, on June 1, we closed the divestiture of our Australian subsidiary to Asahi, which was sold for $16 billion -- AUD 16 billion, equivalent to approximately USD 11 billion in enterprise value. While we're rapidly adapting our business to best meet the needs of our customers and consumers in the current environment, the fundamental strengths of our company remain unchanged. We have a clear commercial strategy, the world's most valuable portfolio beer brands, diverse geographic footprint, industry-leading profitability and an incredibly deep talent pool. I'm confident that these invaluable assets position us well for a strong recovery. Our culture is as strong as ever, and our people are stepping up with the passion and commitment of true owners. We're privileged to lead the global beer category, a category that has existed for centuries through many crises and will continue to thrive long after the current crisis is behind us. Before we close, I'd like to say thank you, especially to frontline health care workers around the world, who are working hard to keeping us safe. And thank you to our teams at AB InBev, who are working with agility, resilience and dedication, especially those on the ground, ensuring business continuity in these challenging times. Thank you for your attention and for your continued trust and support. I'll now pass the floor back to our Chairman.

Thank you, Brito. We now turn to the remuneration report and the remuneration policy, which are submitted for your approval at this meeting. The remuneration report and policy are found in the corporate governance chapter of our annual report. The annual report was published on our website on 27 February 2020, and an addendum to the report was published on our website on 28 April 2020. The remuneration report and policy have 2 principal objectives. The first is to provide shareholders with a comprehensive view of AB InBev's remuneration principles. These principles include attracting, motivating and retaining the qualified professionals we need for our global business and the competitive environment in which we operate, fostering a meritocracy-based system, promoting alignment between the interest of management and shareholders and encouraging long-term share ownership. The second objective of the remuneration report is to provide clear disclosure to shareholders of the structure and amount of remuneration of our Board and the Executive Committee. We highlight the following in that regard. The remuneration of the Board was set by last year's AGM. It includes a fixed cash fee component and a share-based component consisting of an award of restricted stock units as from 2019 onwards. The fixed annual fee payable to the directors is EUR 75,000, except for the Chairperson of the Board and the Chairperson of the Audit Committee, whose fixed annual fees are EUR 255,000 and EUR 127,500, respectively. This fixed annual fee is supplemented by a fixed annual cash retainer per Board committee membership of EUR 28,000 for the Chairperson of the Audit Committee, EUR 14,000 for the other members of the Audit Committee, EUR 14,000 for each of the Chairpersons of the other Board committees and EUR 7,000 to each of the other members of such other committees. In 2019, the total cash remuneration paid to directors was EUR 1,464,500. The share-based component of the remuneration of the directors for the exercise of their mandate during the previous financial year is granted under the form of restricted stock units, corresponding to a fixed gross value per year of EUR 550,000 for the Chairperson of the Board, EUR 350,000 for the Chairperson of the Audit Committee and EUR 200,000 for the other Board members. These restricted stock units vest after 5 years. The remuneration policy for our executives is designed to support the company's high-performance culture and the creation of long-term sustainable value for our shareholders. The goal of the policy is to reward executives with market-leading compensation, conditional upon the overall success of the company and individual performance. Our remuneration policy promotes alignment with shareholders' interests by strongly encouraging executive ownership of shares in the company and enables the company to attract and retain the best talent at global levels. The remuneration package of the CEO and the Executive Committee members has 3 main components: first, base salary. Because our remuneration policy is based on meritocracy and performance, variable compensation is more important than base salary. Base salary is generally aligned to mid-market levels. In 2019, our CEO earned a salary of EUR 1.46 million, while the other members of the Executive Committee earned an aggregate annual base salary of EUR 2.27 million. Second, variable compensation. Our variable compensation system is designed to drive short- and long-term performance. It is directly linked to the achievement of both company and individual targets. For 2019, the CEO earned a bonus of EUR 2.61 million. The bonus of the other members of the Executive Committee amounted to EUR 2.49 million in aggregate. To encourage long-term performance, executives are encouraged to invest this bonus in full or in part in company shares, which remain blocked for 5 years. As an incentive for this voluntary investment, the executives receive 3 matching shares from the company for each share they voluntarily invest. The matching shares are granted in the form of restricted stock units and vest after 5 years. With respect to bonuses for the financial years 2020 and onwards, 1/2 of the restricted stock units will vest over a 3-year period and the other 1/2 will vest after 5 years. Finally, executives may also receive long-term incentives paid out in stock options or other share-related instruments such as restricted stock units. The instruments are granted at market value and are subject to predefined vesting periods. In 2019, no long-term incentive stock options or restricted stock units were granted to the CEO. A total of 502,597 annual long-term incentive stock options were granted to the other members of the Executive Committee. No grants were made to Executive Committee members in 2019 under our exceptional long-term incentive plans. This concludes our remarks on the remuneration report and remuneration policy. For further detail, please refer to the full report and the policy as included in the corporate governance chapter of our annual report.

We now turn to shareholder questions. As you know, shareholders were invited to submit questions in writing ahead of this meeting. We have received 6 questions, which we will now address. The first question reads as follows. Since acquiring my shares in Newbelco, there has been a steady decline in the dividends paid out by the company in euros per share. In 2019, shareholders received only 11% of the profit available for allocation as dividends. This has been accompanied by a correspondingly steady decline in the share price. Could the directors please indicate by when shareholders might start receiving dividends more in line with the capital risk to which they are exposed in holding the company's shares? Well, thank you for your question. First, we heard Brito explain in his presentation the company's 4 capital allocation priorities and use of cash. In brief, the first priority is to invest in our brands and growth opportunities; the second is to deleverage; the third is subject to strict discipline and the deleveraging commitment to look at opportunistic M&A; and then the fourth is to return excess cash to shareholders in the form of dividends or share buybacks. Second, Brito also has explained the company's decision to propose a final dividend of EUR 0.50. Finally, you'll remember that in March 2020, the company withdrew its previously issued 2020 outlook, including with respect to dividends, and that was because of the uncertainty and the volatility and the fast-moving developments of the COVID-19 pandemic in the markets where we operate. And the company has not provided new guidance at this time. So the company continues to carefully monitor developments in this complex and constantly evolving environment, which will inform any future decisions, including on dividend payments. We now turn to the second question. It reads as follows. Premiumization strategy. A year ago or so, AB InBev emphasized the fact that there is still a significant premiumization potential for beer. In the environment post COVID, do you think the premiumization strategy can still be well executed without impacting your market share? I'll pass the floor to Brito for his views on the question.

Yes. Thank you, Marty. Thank you for the question. Premiumization remains a top growth opportunity for our company today and in the long term. It continues to be a trend across our markets, and it's a critical driver of growth as it generates incremental top and bottom line. Evidence of this is that our high-end portfolio and global brands continue to grow ahead of our core portfolio. In the past, we have seen that beer trends show less elasticity in soft economic environments as it's considered an affordable luxury in many markets. In addition, compared to wine and spirits, the beer category is in its early stages of premiumization. And this provides an opportunity for us to grow and close the gap. We're well positioned to capture this opportunity by leveraging our market maturity model and our category expansion framework. If you're interested in learning more about our market maturity model and category expansion framework, please refer to the Investors section on our website and to our annual report. Back to you, Marty. Thank you.

Thank you, Brito. The third question reads as follows. Becoming a more consumer-centric organization, many believe that AB InBev in the past focused too much on being a production-driven organization, so much so that it lost touch with fast-changing consumer preferences. Could you tell us what concrete steps have been taken now to evolve AB InBev into a more consumer-centric organization and where we are in this transition journey? And again, I pass the floor to you, Brito.

Thank you, Marty. Thank you for the question. Consumer-centricity and innovation drive all we do. We had increased focus on these drivers during the past 5 years and taken steps to shape our organization to be more agile and consumer-centric than ever, which is critical to address quickly evolving consumer needs. For example, in 2015, we created ZX Ventures, a business unit tasked with accelerating innovation by addressing emerging consumer needs with new and disruptive products and businesses. The major product innovations and businesses that have come out of ZX Ventures include things like Drinkworks, an at-home alcohol system developed in partnership with Keurig that utilizes pods to make single-serve, ready-to-drink cocktails. Another one will be our own direct consumer e-commerce platforms in several countries. Another example would be our strengthened specialty portfolio of premium craft and specialty beers that we developed in many countries around the world. ZX Ventures accounted for more than 15% of our revenue growth by the end of 2019. In 2018, we created 2 new senior leadership positions to capture organic growth opportunities in nonalcohol beverages in direct consumer initiatives. We also expanded DraftLine, our internal agency that creates consumer insights by data analytics, so we can swiftly respond with new products and campaigns. Finally, this year, COVID-19 has tested our agility and consumer-centric approach. In today's environment, consumers are changing their habits very fast, increasing the adoption of e-commerce and contactless delivery. To respond, we have accelerated our business transformation enabled by technology, which was well underway before the pandemic hit. We believe that the strong foundations we have built in the past few years put us in an advantage to continue driving future growth within these evolving trends. Thank you for the question. Back to you, Marty.

Thank you, Brito. The fourth question reads as follows. Growth market exposure. Almost 2/3 of your volumes and about a similar proportion of your operational cash flow comes from emerging markets. The macroeconomic environment for these geographies is expected to be more negatively impacted by COVID and could take much longer to recover. What steps is the company taking to prepare for a delayed recovery in the growth markets? And linked to the emerging markets, to what extent can you manage the big currency devaluations? Could you give an estimate what the impact of currency fluctuations would be for 2020 on revenues, EBITDA and net profit if these exchange rates would remain at the current levels. Thanks for the question. I'll take it to you, Brito.

Thank you, Marty. Thank you for the question. We're proud to have a diverse geographic footprint with 10 markets contributing to 80% of our EBITDA, reducing our exposure to any given country. We have a long history of operating in emerging markets and recognize that they are inherently volatile. Our ownership culture requires us to take a long-term view of our business and weather such volatility to pursue the growth opportunities that are also characteristics of those markets. We believe we have the right people, portfolio and strategy in place to deliver long-term sustainable growth and expand the global beer category. We have not provided guidance on the impact of currency fluctuations on our 2020 results. However, what I can say with respect to FX volatility is that our hedging policy remains unchanged. We continue to hedge our FX and commodity exposures when possible on a 12-month, forward-rolling basis. Thank you. Back to you, Marty.

Thanks, Brito. The fifth question reads as follows. Deleveraging efforts. With the impact of COVID delaying your deleveraging efforts from organic cash flows, it might be a while for AB InBev to reach your stated leverage level of 2x net debt to EBITDA. What other options is the group considering to reduce leverage? And for this question, I pass the floor to our CFO, Fernando Tennenbaum.

Thank you, Marty. As discussed previously, our capital allocation priorities are the following. The first priority for the use of cash is to invest behind our brands and to take full advantage of the organic growth opportunities in our business. Second, the leveraging to around a 2x net debt to EBITDA ratio remains our commitment, and we will prioritize debt repayment in order to meet this objective. Third, with respect to M&A, we will always be ready to look at opportunities when and if they arise, subject to our strict financial discipline and deleveraging commitment. Our fourth priority is to return excess cash to shareholders in the form of dividends and/or share buybacks. With this being said, we must exercise prudent measures during times of uncertainty and volatility, including efficient management of discretionary expenditures, especially those which may not prove effective in the current environment. We have also taken a decision to reduce the amount of the proposed final 2019 dividend given the uncertainty, volatility and continued impact of the COVID-19 pandemic. We believe this is prudent and in the best interest of the company. This decision is consistent with our financial discipline, deleveraging commitments and other actions taken to navigate this environment. Additionally, we had always reviewed our asset base to identify noncore assets that can be divested as part of our normal business operations. At this stage, there are no major divestment plans to highlight. Back to you, Marty. Thanks.

Okay. Thank you, Fernando. The sixth and last question that we received reads as follows. Sustainability. As the world's largest beer company, we believe AB InBev has far greater responsibility in promoting responsible drinking. And in this regard, your sustainability targets pay relatively less attention on this aspect. Could you share with us what targets have been placed to promote even further when it comes to creating awareness on responsible drinking? I pass this one to you, Brito.

Thank you, Marty, and thank you for the question. We want every experience with beer to be a positive one. We believe that harmful consumption of alcohol is bad for our consumers, our colleagues, our families, our communities and our business. That's why we take seriously our responsibility to help reduce and prevent the harmful use of alcohol across the world. We have promoted responsible drinking for decades. And to support our commitment, in 2015, we set out our Global Smart Drinking Goals to be achieved by 2025, which you can find on our website and in our annual report. By sharing what we learned in collaborating with public health authorities, trade associations, expert in civil society, we know AB InBev can be part of the solution. The Global Smart Drinking Goals are different from and in addition to our 2025 sustainability goals, which cover environmental sustainability and resilience of our value chain in our communities. However, both sets of goals are connected to our aspiration of building a company to last for the next 100 years and beyond. Thanks for the question. Back to you, Marty.

Okay. Thank you, both Brito and Fernando. This concludes the Q&A session, and I now ask Mr. Carnewal to take us through the resolutions, which are being presented for approval.

The voting modalities. Each share may cast one vote. As mentioned at the outset of the meeting in accordance with the flexibility offered in the Belgian Royal Decree no. 4 of April 9, 2020, only votes expressed in writing in advance of the meeting and valid proxies received by the company with express voting instructions will be taken into account. Resolutions. I will now read each of the proposed resolutions on the agenda and confirm the voting results on the basis of the votes in writing received prior to the meeting as well as valid proxies received by the company with express voting instructions. Board reports. I have been exempted from reading the detailed text of the following documents and reports, which have been made publicly available before the meeting: the management report by the Board of Directors on the accounting year ended on the 31st of December 2019; the report by the statutory auditor on the accounting period ended on the 31st of December 2019; annual accounts relating to the accounting year ended on December 31, 2019; and the draft consolidated Articles of Association. The first resolution. The Board proposes to amend Article 24.4 of the Articles of Association in order to allow the Board to decide by way of written resolutions under the conditions of the Belgian Code of Companies and Associations as follows: any or all of the directors may participate at a meeting of the Board of Directors by means of telephone, video conference or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting by such means shall constitute presence in person at such meeting. Decisions of the Board of Directors may also be adopted without any physical meeting by the unanimous consent of the directors expressed in writing. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.95% majority. The second resolution. The Board proposes to amend Article 44 of the Articles of Association in order to allow the Board to distribute interim dividends under the conditions of the Belgian Code of Companies and Associations as follows: the annual dividends shall be paid at the dates and places decided by the Board of Directors. The Board of Directors may pay an interim dividend in accordance with Article 7:213 of the code. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.94% majority. Third resolution. The Board proposes to amend several provisions of the Articles of Association in order to conform such provisions with the changes imposed by or resulting from the rules of the Belgian Code of Companies and Associations and other Belgian legislations to align the text of the Articles of Associations with the terminology and numbering of such code. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.95% majority. Fourth resolution. The Board proposes to approve the statutory annual accounts relating to the accounting year ended on December 31, 2019, including the allocation of the results set forth on the slide. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.79% majority. Fifth resolution. The Board proposes to grant discharge to the directors for their performance -- for the performance of their duties during the accounting year ended on the 31st of December 2019. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 98.91% majority. The sixth resolution. The Board proposes to grant discharge to the statutory auditor for the performance of his duties during the accounting year ended on December 31, 2019. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.24% majority. Seventh resolution. The Board proposes to renew the appointment of Mrs. Michele Burns as independent director for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 97.25% majority. Eighth resolution. The Board proposes to renew the appointment of Mr. Elio Leoni Sceti as independent director for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 96.20% majority. Ninth resolution. The Board proposes upon proposal from the reference shareholder to renew the appointment as director of Mr. Alexandre Van Damme for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 83.39% majority. Tenth resolution. The Board proposes upon proposal from the reference shareholder to renew the appointment as director of Mr. Grégoire de Spoelberch for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 86.20% majority. Eleventh resolution. The Board proposes upon proposal from the reference shareholder to renew the appointment as director of Mr. Paul Cornet de Ways Ruart for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 82.68% majority. Twelfth resolution. The Board proposes upon proposal from the reference shareholder to renew the appointment as director of Mr. Paulo Lemann for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 86.11% majority. Thirteenth resolution. The Board proposes, upon proposal from the reference shareholder, to renew the appointment as director of Mrs. María Asuncion Aramburuzabala for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 85.26% majority. Fourteenth resolution. The Board proposes to acknowledge the end of the mandate of Mr. Marcel Herrmann Telles as director and upon Proposal of the reference shareholder to appoint Mr. Roberto Thompson Motta as director for a period of 4 years, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2023. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 82.89% majority. Fifteenth resolution. Upon proposal from the restricted shareholders, the Board proposes to renew the appointment as restricted share director of Mr. Martin J. Barrington for a period of 1 year, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2020. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 83.41% majority. Sixteenth resolution. Upon proposal from the restricted shareholders, the Board proposes to renew the appointment as restricted share director of Mr. William F. Gifford, Jr. for a period of 1 year, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2020. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 86.30% majority. Seventeenth resolution. Upon proposal from the restricted shareholders, the Board proposes to renew the appointment as restricted share director of Mr. Alejandro Santo Domingo for a period of 1 year, ending at the end of the shareholders' meeting, which will be asked to approve the accounts for the year 2020. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 85.39% majority. Eighteenth resolution. The Board proposes to approve the remuneration report for the financial year 2019 as set out in the 2019 annual report, including the remuneration policy. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with an 80.26% majority. Nineteenth resolution. Without prejudice to other delegations of powers to the extent applicable, the Board proposes to grant power to Jan Vandermeersch, Global Legal Director, Corporate, with powers to substitute to proceed with the signing of the restated Articles of Association and their filings at the clerk's office of the Enterprise Court of Brussels as a result of the approval of the first, second and third resolution; and two, any other filings for publication formalities in relation with the above resolutions. On the basis of the votes cast in writing ahead of the meeting and valid proxies received by the company with express voting instructions, this resolution has been approved with a 99.95% majority. There being no further business on the agenda, I suggest that the meeting now be closed. The minutes have been drafted in Dutch and French. They will be signed by Mr. Jan Vandermeersch acting as a proxy holder of the Board of Directors of the company, myself and a notary with competence to instrument in the city of Leuven.

Once again, we thank all our shareholders for your flexibility and understanding. And we very much look forward to our shareholders' meeting next year, where we hope to see you in person once again. Before we close, I want to acknowledge Mr. Marcel Telles, whose tenure on our Board has concluded today. Marcel joined the Board in 2004 at the time of the transformational combination of Interbrew and AmBev and has been a great supporter and advocate in shaping the work of our company and our Board for more than 15 years. During his tenure, he has demonstrated outstanding leadership as Chairman of the Remuneration and Nomination Committees and has been instrumental in building our great company. On behalf of the entire Board, we thank Marcel for his extraordinary contributions as a Board member and remarkable commitment to the company over many years. And while we will miss Marcel, we are very pleased to welcome back to the Board Mr. Roberto Thompson. Roberto served on our Board from 2004 until 2014. And this experience provides an unparalleled understanding of the company, and his expertise will offer us continuity and stability on the Board. We're very pleased to welcome Roberto back and congratulate him on his election. With this, we have come to the end of the meeting, which is now closed. Thank you.