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

Welcome to AB InBev's Second Quarter 2026 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Michel Doukeris, Chief Executive Officer; and 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. [Operator Instructions] Some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on 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 March 3, 2026. 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.

Thank you, and welcome, everyone, to our second quarter 2026 earnings call. Today, Fernando and I will take you through our 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 the key highlights. The momentum of our business continued in the second quarter. While the consumer environment remains dynamic, the consistent execution of our strategy and investment in our mega brands and mega platforms enabled us to deliver solid top and bottom line performance. Beer volumes increased by 1.1% with market share growth globally and record high second quarter volumes in Mexico, Colombia, Ecuador, amongst others. Revenue increased by 5.6% with solid revenue per hectoliter of 4.2%, driven by positive mix and our proactive revenue management agenda to keep pace with rising inflation and input costs. Underlying EPS increased by 23.4% to reach $1.21. Free cash flow in the first half of the year increased by $2.5 billion to reach $3.9 billion. Our performance was driven by our growth drivers with continued momentum across our mega brands, non-alcoholic beer and Beyond Beer. This marketplace continued to scale with GMV increasing by 50% to reach $1.2 billion. Overall, this quarter demonstrated continued volume momentum, market share gains and solid cash flow generation, reinforcing our confidence in the resilience of our strategy. Turning to our operating performance. Total volumes increased by 0.9% in the second quarter with solid revenue per hectoliter growth driven by our revenue management capabilities and positive mix. EBITDA increased by 5.8% with flattish margins as disciplined cost management enabled increased sales and marketing investments and offset transactional FX headwinds. Our geographic footprint and global scale enable us to deliver consistent results through different operating environments. Our footprint is both well diversified and balanced with around 70% of our EBITDA generated in emerging and developing markets. We are well positioned to capture future industry growth with a mix of currencies. Now let's review our key regional highlights, starting with North America. In the U.S., our portfolio momentum continued with share gains in both beer and Beyond Beer. Our beer performance was led by Michelob Ultra, Busch Light and Busch Light Apple, which were the top 3 volume share gainers in the industry. Our Beyond Beer portfolio delivered revenue growth in the mid-70s, led by Cutwater, which grew revenue in the triple digits and was the #1 share gaining brand in the total spirits industry in the second quarter. Now let's turn to Middle Americas. In Mexico, we continued to strengthen our portfolio architecture and expand our total addressable market by offering consumers more choices across more occasions. We grew revenue in premium, mainstream non-alcohol beer and Beyond Beer, driving mid-single-digit top and high single-digit bottom line growth with market share gain. In Colombia, record high second quarter volumes drove double-digit top and bottom line growth with our portfolio estimated to have gained share of total alcohol. In Brazil, market share gain and an improved industry drove beer volume growth and a double-digit bottom line increase. Our premium and super premium beer brands led our performance and delivered mid-20s volume growth in strengthening our leadership position in the segment. In Europe, volumes grew by low single digits as market share gains, innovation and continued premiumization drove a low single-digit top line increase. In South Africa, disciplined revenue management and margin expansion drove mid-single-digit top and bottom line growth. Premium and super premium beer led our performance, delivering high 20s volume growth. Now moving to APAC. In China, revenue declined by 8.8% as we underperformed a soft industry, which was impacted by adverse weather and continued softness in the on-premise channel. While overall volumes remained under pressure, we continue to invest in our mega brands and innovation and strengthening our portfolio brand power. Our market share trend improved sequentially, supported by a return to growth in our super premium and core plus brands. There is more work to do, and we are investing to improve our execution, expand our in-home channel presence and increase our participation in the growing segments of the industry. Let's now turn to our strategic pillars, starting with lead and grow the category. Relevant brands are essential to our strategy as we drive organic growth. Through consistent investment and continued improvement in our marketing capabilities, we are strengthening our connection with consumers and increasing the brand power of our portfolio. This progress was recognized at this year Cannes Lions Festival, where we were named the 2026 Creative Marketer of the Year, the only company history to receive this award 3 times. The strength of our portfolio is reflected in the latest Kantar BrandZ ranking. Eight of our brands are within the top 10 most valuable brands in the world, with Corona ranked #1 for the third year in a row. Our mega brands continue to drive profitable growth across our markets with net revenue increasing by 6.2%. Corona drove premiumization with revenue growth of 17% outside of Mexico and double-digit volume increase in 37 markets. The combination of our mega brands and platforms is a powerful opportunity to connect with consumers through moments of celebration. Following successful activations in the first half of the year, we have a strong lineup for the second half and into 2027. Through our mega platforms, we are placing beer and our brands at the center of culturally relevant moments for consumers, including the Winter Olympics, Rolland Garros, the FIFA World Cup and Wimbledon. By deploying our leading digital capabilities and strong execution by our teams, our brands were the most talked about during these events, achieving billions of impressions and earning the #1 share of digital engagements. The FIFA World Cup is a once every 4 years opportunity to build the long-term brand equity of our portfolio of consumers. Across the tournament, beer was central to the moments of celebration, connection and share the experiences that make the event so iconic. In line with our strategy to expand availability of balanced choices, we leveraged the FIFA World Cup to roll out Michelob Ultra across the Americas, building on its momentum in the U.S., where Ultra was again the #1 volume share gainer. In the second quarter, 40% of Ultra's volume growth came from outside the U.S. We continue to execute our category expansion levers to expand choice, occasions and participation in the category by offering superior core brands, innovating balanced choices and expanding our premium and Beyond Beer portfolios. In non-alcohol beer, our portfolio outperformed the industry and delivered a 27% revenue increase, led by Corona Cero and Michelob Ultra Zero. With an estimated 60% of the volume coming from new occasions and new consumers, non-alcohol beer is an opportunity to develop the category and drive incremental volume growth. In the second quarter, we brought Bush Light Apple back to the U.S. by popular demand. Since its launch in April, the brand became the #2 volume share gainer in the total industry in quarter 2. Ahead of Wimbledon, we launched Strawberries and Green flavored Stellar Plus. The innovation contributed to a 4 percentage point increase in Stella's share of total alcohol beverage at the tournament. In Beyond Beer, we expanded the portfolio variety of Cutwater, supporting the brand's performance in the U.S. Geographic expansion of our Beyond Beer brands is a meaningful growth opportunity. In the first half of the year, we expanded the availability of flying fish in 8 markets and are encouraged by the early results we see across Europe and the Americas. Let's turn to our second strategic pillar, digitize and monetize our ecosystem. In the second quarter, this captured $15 billion in gross merchandising value, a 16% increase versus last year. On an annualized basis, we have more than 25 billion AI-driven touch points across our ecosystem, creating opportunities to improve customer service, revenue management and support the execution of our commercial agenda. This marketplace continued to scale with GMV from third-party products increasing by 50% versus last year to reach $1.2 billion. Our digital D2C business is growing and enabling us to monetize our ecosystem. Our digital platforms served 13 million consumers and generated $165 million in revenue. As we digitize and monetize this ecosystem, we are commercializing third-party products on our D2C platforms and now have a growing D2C marketplace with annualized GMV of $200 million. With that, I would like to hand it over to Fernando to discuss the third pillar of our strategy, optimize our business.

Thank you, Michel. I'll take a few minutes to discuss the progress we have made on four areas in optimizing our business, superior profitability, compounding dollar EPS growth, improved free cash flow and capital allocation flexibility. Through disciplined resource allocation and overhead management, we were able to offset transactional FX headwinds to maintain our superior margins while increasing sales and marketing investments. Over the last 12 months, we have invested $7.9 billion in sales and marketing, and we increased our investments organically by 9% in the first half of this year to fuel the growth of our business. While each year has unique dynamics, we are confident that the combination of our leadership advantages, disciplined revenue management, continued premiumization and efficient operating model creates an opportunity for further margin expansion over time. Moving on to EPS. Top line growth and effective cost management drove constant currency EPS of 12.9%. With translational FX tailwinds, dollar EPS increased by 23.4% to reach $1.21 per share. As we focus on optimizing our business, in the first half of the year, we increased our free cash flow by $2.5 billion, driven by EBITDA growth and working capital improvements. This increase in cash generation enabled further capital allocation flexibility while strengthening our balance sheet. We increased our dividend, executed share repurchases and pursued selective value-accretive M&A while continuing to deleverage. Our net debt-to-EBITDA ratio reached 2.86x, a 0.4x improvement year-over-year. Our bond portfolio remains well distributed with no relevant medium-term refinancing needs. We have no bonds maturing in 2026, a weighted average maturity of 12 years and no financial covenants. Our results in the first half of the year, the resilience of our strategy and the momentum of our business all reinforce our confidence in our ability to deliver on our 2026 outlook of 4% to 8% EBITDA growth. With that, I'll hand it back to Michel for some final comments.

Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap the second quarter of the year and the opportunity we have ahead of us. Our performance this quarter reflects the resilience of our strategy and our ability to deliver reliable compounding growth through different operating environments. Our top line grew 5.6% with beer volume growth of 1.1% and net revenue per hectoliter growth of 4.2%. We increased sales and marketing investments in our brands by 9% organically. Underlying EPS grew by 23.4% in the second quarter and by 22.1% in the first half. Free cash flow increased by $2.5 billion to reach $3.9 billion at the half year. And net debt to EBITDA improved by 0.4x year-over-year, reaching 2.86x, strengthening our balance sheet and increasing our capital allocation flexibility. Together, these results reinforce our confidence in our ability to deliver compounding growth and long-term value creation for our shareholders. With that, I'll hand it back to the operator for the Q&A.

[Operator Instructions] Our first questions come from the line of Edward Mundy with Jefferies.

So my first question is for Michel. So you've been executing your growth strategy for about 5 years now, and we're seeing both pretty healthy revenue per hectoliter growth and return to positive volume growth. How do you assess where ABI is in that journey today? And as you see the growth contribution from the mega brands, premiumization, non-alcohol, Beyond Beer all coming through, does this give you greater confidence in the durability and consistency of growth from here? That's my first question. And my follow-up is for Fernando. Over the last couple of years, there's been a big focus on deleveraging and strengthening the balance sheet. And as you think about the next few years, will this increased capital allocation flexibility be aimed at accelerating organic growth and bolt-ons? Or do you think there's scope for progressively higher cash returns to shareholders in the fullness of time?

Ed, thanks for the question. As you stated, I'll take the first one here and leave the second to Fernando. I think that you are right that over the last 5 years and especially when you look at this year, we have been successfully, I would say, resetting the business. because we had a lot of debt. We had growth constraints in many areas across the globe. And as we organized our portfolio and this architecture that we have today is much more flexible because we have growth not only in beer but in different segments in beer from core, premium, non-alcohol. We added to that Beyond Beer, which is growing globally in a very healthy way. And we put together capabilities around revenue management, organic growth, innovation and digital that prepared the company to the moment that we are seeing now in 2026, where we see volume growth solid revenue per hectoliter growth coming both from revenue management and from mix management. Worth to remember that mix for us gets into the revenue per hectoliter. We don't add the mix to volume. Volume is purely hectoliter base. And we will continue to optimize the business. We've been seeing a strong earnings per share growth in the first half of the year, 22% with this 23% in the second quarter. So continuation of the strategy execution, but moving from a moment where we were resetting the business, reducing that, organizing the capabilities to growth to a moment that we see more the reignition of the volume growth and the acceleration of our strategy and growth levers as we move forward. Thank you for the question.

Ed, this is Fernando here. So you asked about cash flow allocation flexibility. First of all, it's fair to say that it is a good cash flow. And it's kind of Michel touched probably in the first two items of our strategy. The third item is optimize our business. And as we keep delivering kind of this sort of results and we keep growing the business while maintaining CapEx within our outlook, containing these levels, the consequence of that is that you do generate more cash. And as you continue to evolve the business and continue to generate more cash, you create more optionality. If you look at what we've done this year so far, this year, while kind of if you see from a dividend standpoint, so dividend was up. We were able to invest behind the organic growth of the business. So you see more sales and marketing investments to support the growth. You see that while we are doing that, we also did some selective M&A. We did the MCT and the BBox M&A. And we did all that while also improving the strengthening the balance sheet, so we reduced the leverage. So when you combine all of that, what I can tell you is that the goal of us is always to create value and this optionality increase your -- the way that you can create value. So our Capital allocation is dynamic, as we said. But at any given moment in time, the goal is always to create value. And with more cash flow, these tasks become easier because we have more optionality.

Our next question comes from the line of Mitch Collett with Deutsche Bank.

I've also got two questions. My first one is for Michel. So you said, Michel, that in -- from the World Cup, you expected, I think, 20 to 30 basis points of full year volume benefit. Now that the World Cup is behind us, is that roughly what you saw? And can you comment on how you think your World Cup activations may benefit your brands and your business longer term? And then my second question, I think, is for Fernando. I think you said on the 1Q call that you expect a more balanced year from an organic EBITDA growth perspective. Is that still what you would expect given the relevant puts and takes from both 1H and 2H as you see them now?

Mitch, thanks for the question. I'll take the first one here and leave the second to Fernando. Yes, we talked about this lift from the FIFA, which for us on average is around 0.25 in the range that you said, 0.20 to 0.30. And I think that this is going to be the number that we will end up reaching this year. Of course, we still have the second half of the year, so we can calculate the exactly lift of the months of June and July, but I think that's going to be within the range. More important, as you mentioned, I think that the benefits of the activation and everything that we have done and seen from the World Cup will extend far beyond the year. And we really executed a global campaign was fantastic. We had for the Americas, Michelob Ultra to the rest of the world, Budweiser. On our local markets, many of our brands -- local brands supported the local teams and one, which I think that's going to be the most impactful part of the FIFA for us was the rollout of Michelob Ultra across Americas. So before FIFA, you could find Michelob Ultra in Canada, U.S., Mexico, some other Caribbean and Central America markets. But now you extend this all the way through Brazil, Argentina, Paraguay and the brand as we launched it, introduced it is performing very well. To give you a number, which I think is very relevant, despite of the fact of the size that Ultra has in the U.S. and this #1 share gain in the U.S., which brings a lot of growth to the brand, 40% of what the brand grew on the second quarter came from markets outside of the U.S. So this balanced choice idea is very relevant within our strategy. Michelob Ultra plays a central role on that and the rollout of the brand, very strategic across Americas during FIFA will be one of the best outcomes of this investment that we've made for FIFA. On top of that, I think that we saw consumers having a lot of fun really celebrating the moment of FIFA throughout the 3 countries here, but also globally. I think that the participation was fantastic. The sales on the concessionaries were above and beyond the expectations. We could have had more, let's say, if the U.S. could have gone further in the competition, if the Brazilian team had performed better, equally to Mexico, Colombia. Nevertheless, the funds enjoyed until the last minute, the audience was great, the investment that we made was great. And now we are turning the page to the second half of the year, where we also have a lot of activities and plenty of exciting moments to be together with consumers. Thank you.

And Mitch, Fernando here. You are asking if it still holds true that there should be a more evenly distributed year in terms of growth for. Yes, still hold true. We knew kind of a lot of the puts and takes since the beginning of the year, and we're being very proactive in the revenue and cost management to better balance half 1 and half 2. The only caveat, and we said that before, is that sales and marketing should be more skewed towards Q2 and Q3, especially given the World Cup. But overall, we expect a balance of year and within our outlook of 4% to 8%.

Our next questions come from the line of Rob Ottenstein with Evercore ISI.

Michel, I was wondering if we can drill down on the U S market. A lots of puts and takes, right? There's the weather, higher gasoline prices, holiday timing, FIFA. But can you -- when you kind of cut through it all, how do you assess the strength of the U.S. beer market in Q2 versus Q1 versus last year? Anything that comes out? And then more importantly, how do you look at your business, maybe kind of give a scorecard to how you're doing in the market, which is certainly better than it has been in the past, but give yourself kind of a scorecard. And what are you doing now to ensure continued and building momentum on the top line and the bottom line into the second half of the year and into 2027?

Thank you, Robert. And it's always good to put the U.S. in context, right? So very relevant market for us. It represents around 10% to 15% of our business globally. And of course, house of brands, brands such as Michelob Ultra that I just spoke about that we are rolling out through Americas. So it's an innovation to the other markets, but it's an innovation that is over 20 years in the making in the U.S. and continues to grow. I think that is super relevant, the way that you put the question because there is many puts and takes on the quarter 2. I think it starts with Easter, then we all know because we live here that the weather is being and continue to be a challenge in the U.S., while we continue to transition from the La Nina to the El Nino. Then at the back end of the quarter, you had both FIFA, but also 4th of July that this quarter flipped to the quarter 3 versus where it was last year on the quarter 2. And we see that the quarter 1 started with a good mood for consumers and a stabilization that further deteriorated a little bit on the quarter 2 because of inflation that accelerated gas prices and everything that we are seeing around the country. That's the part that we cannot control, the calendar, the economy. We can just adapt. And I think that the architecture of our portfolio today is way better than what used to be. That was the main mission for the team here since 2017 was rebalance the portfolio. And I'm happy to see today that we are gaining share in beer. We are gaining share in Beyond Beer. We were the fastest growing company in spirits because of the performance of cut water and also the fastest-growing brands in the non-alcoholic space. So I think that the mission of rebalancing the portfolio and getting this portfolio architecture to be more flexible to where consumers are dining is working, and we are winning with consumers across all segments and especially on the segments that are growing the fastest. I'll leave this scorecard for Brandon to you guys to give because I know that you are way better than me on that. And the main thing that we are doing is we are continuing to invest behind our brands, so they continue to be relevant for consumers across relevant occasions. I think that FIFA was an incredible display of that. We are making this portfolio architecture both more flexible and more competitive. That's why we are gaining share across the segments. And we continue to invest on our capabilities being revenue management capabilities, execution capabilities, digital capabilities and especially the capabilities around marketing that get us closer to consumers. Thank you.

Our next questions come from the line of Olivier Nicolai with Goldman Sachs.

First, going back to Slide 27, if I may, on the free cash flow, which was very strong in H1. Should we assume you will be able to keep most of these net working capital benefits in the second part of the year? And are you kind of on track to get towards $13 billion of cash flow this year, which will be, I believe, a record for the company? And then secondly, perhaps for the U.S. and for Michel, you're currently leading the spirits RTD segment. How do you assess the risk of increased competition from spirits companies as they scale up production and distribution and potentially try to become more aggressive on price? And to some extent, what kind of real competitive advantage does brands like Cutwater and Nutrl have to fend off new competitors coming from spirits producer? And then lastly, that's a question, promise, but thank you for flagging the mix components within your revenue criteria.

Olivier, Fernando here. So thanks for your question. So we've been working a lot on Pillar 3 of our strategy to optimize our business. And the good cash flow that we saw in H1 was a consequence of that. But in a nutshell, if you think about it, since we are growing a -- and we are driving efficiency across all the lines. We are -- we had more EBIT, good or good nominal growth. And our cash flow -- our EBITDA -- sorry, our CapEx outlook is the same BRL 3.5 billion to BRL 4 billion from last year. We look at all the lines, of course, you could expect that this growth is something that one would expect. And we don't give kind of a specific guidance on quarter-on-quarter or don't give a specific guidance on cash flow. But if you add all the pieces of our outlook, you could expect us to continue to make improvements in our cash flow year-over-year.

Olivier, on the second question, I've been answering this question in different shapes and forms around the RTDs, the momentum that we have, not only in the U.S. but globally and the, let's say, increased competition in the segment in the U.S., maybe in some other countries as well as we keep rolling out our global portfolio and gaining space in this area. But to be very straightforward on your question, I think that we are the competition, slightly different here. So while in beer, we've been dealing across all markets with competitors, which we always welcome to the industry because they make us better, more innovative and stronger in execution. In the spirit side, we are the competition. And we are winning with consumers because we are providing a superior proposition, not only Cutwater, but with Nutrl. Now we just acquired a great company, BeatBox that's going to bring more to this arena. We are leveraging our brand-building capability. It was worth to say that this brand was in existence 6, 7 years ago and is moving towards becoming a $1 billion brand and is the fastest-growing brand in the spirits industry in the U.S., now a top 6 or 7 overall in size brand in the spirits industry and leading with very strong execution. So competition is out there. In this case, we are the competition.

Our next questions come from the line of Chris Carey with Wells Fargo.

My first question is on China. Clearly, trends took a bit of a step back here in Q2 relative to Q1. Can you just give us a sense of industry performance this quarter versus last quarter and your own performance relative to industry growth rates, maybe sprinkle in some on-premise and off-premise commentary and how weather may have negatively impacted you in the quarter itself? And then from a pricing standpoint in China, I think this was the first positive revenue per hectoliter since the beginning of last year in China. Is that just a product of -- product or channel mix? Or is there something else that was driving a bit of a step change relative to some of those investments you've been making into demand building in the region? So I think in general, it's a question about understanding how the country is evolving and perhaps a bit of a question on your ability to have some visibility into the market in the coming quarters.