felipe dutra - home | ab inbev · 2018-06-28 · •role of financial discipline in our business...

Felipe Dutra Chief Finance & Technology Officer

Financial Performance

• Role of Financial Discipline in our business model

• Risk management: Balancing deleveraging with returning cash to shareholders

Technology driving topline growth

2 © AB InBev 2015 – All rights reserved

Agenda

Financial Performance

© AB InBev 2015 – All rights reserved

3

© AB InBev 2015 – All rights reserved 4

•Focus on a few big things

•Bring people together to enjoy our products responsibly

•Build a healthy and sustainable industry

•Promote a pro-beer environment, and aspiration for beer

•Leverage scale

•Focus markets

•Largest profit pools

•Markets with volume and topline growth potential

•Balance between developed and developing markets

•Focus on Cash Generation

•Cost efficiency, with costs growing below the level of inflation

•Risk management (commodities, currencies, interest)

•Capex & working capital management

•M&A – a core competency but with strict financial discipline

•Capital allocation discipline

•Focus Brands

•Brand health today = top line growth tomorrow

•Revenue and mix management

•Premiumization

•Drive revenue per hl above the level of inflation

•Scale up proven concepts

•Renovation, innovation and invigoration

Leadership Markets Brands Financial Discipline

Dream – People – Culture

Financial Discipline and a focus on cash generation, has driven value creation for our shareholders

$ 14.1

$ 1.2

$ 10.6 $ 5.0

$ 0.7

$ 14.8

$ 15.7 $ 10.5 $ 3.7

$ 3.3

$ 4.0

$ 6.7

0%

5%

10%

15%

20%

25%

30%

35%

40%

16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 42%

5

Cas

h F

low

fro

m O

pe

rati

on

s a

s %

of

Sale

s

EBITDA Margin

AB-InBev

Coke

Molson SABMiller

Heineken

Nestle

P&G

Carlsberg

Pepsi

Unilever

= Cash Flow from Operations (billions USD)

Notes: 1. Figures not adjusted for acquisitions/disposals or differences in accounting standards

2. Figures calculated based on publicly available information relating to cash flow from operations line item per cash flow statement. Figures as of December 31, 2014. 3. MolsonCoors cash flow from operations does not include dividends received from joint ventures, associates and other investments 4. SABMiller figures LTM ending March 2015. Cash flow from operations and sales do not include dividends received from joint ventures,

associates and other investments 5. Diageo figures for the year ending June 2015

Reckitt Benckiser

Diageo


ABI has driven topline growth and increased efficiency over the years, resulting in healthy EBITDA margin expansion and Cash Flow Generation….

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014

Fixed Costs Growth as a % of Inflation (excluding Synergies & Scopes)


ZBB Quick Wins “Back to Basics”

Big

Tra

nsf

orm

atio

nal

Idea

s

Review of Policies

Finance Excellence Program

ZBB Incentive

Communication Strategy

Global Chart Of Accounts

CEO Days

C-Checkpoints

Benchmark Gap Opening

Central Budget Control

Global Visibility and Tracking

94%

90% 89%

71%

…. and we continue to see opportunities to drive efficiencies, leading towards zero organic growth in overhead


2.1%

-0.6%

-5.4%

-7.4% -8.5%

-10.0% -11.0% -12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

2008 2009 2010 2011 2012 2013 2014

Notes: 1. Yearly average (on a rolling 12 month basis). CWC includes elements considered "core” to the operations,. For example core receivables would include items such as trade receivables, other receivables (i.e. marketing prepayments), cash guarantees, loans to customers, non-income tax receivables, packaging deposits, and excludes derivatives, payroll-related receivables, deferred consideration on sales of assets, dividend receivables, interest receivables. Core payables includes items such as trade and other payables, non-income tax payables, packaging deposits, and cash guarantees but excludes derivatives, payroll-related payables, deferred consideration on acquisition, dividend payables, interest payable. There is no change to the calculation of Inventories, we include the same amounts for CWC as for Working Capital (as defined in our Financial Statements) 2. 2008 results for North America includes only 6 weeks of the legacy AB business. Results prior to 2013 exclude Grupo Modelo.

CW

C/

Net

Re

ven

ues

(1

2 m

on

ths)

Core Working Capital (CWC) as a % of Net Revenues (1)

There is still room to improve our CWC performance to further drive cash flow for reinvestment into top-line growth


Holistic debt management approach considers cash flow generation in different currencies, as well as real life constraints Absolute size of our debt portfolio requires us to concentrate our funding in the largest markets, namely USD and EUR

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

$5.5

$6.0

$6.5

$7.0

USD EUR GBP CAD BRL

Current Core Markets Occasional Secondary Markets

3-, 5-, 7-, 10-, 20-, 30-year

12-, 15-, 20+year

3-,4-, 7-, 8-, 12-, 15-, 20 year

5 & 10-year

USD Equivalent Trillions

USD, 36%

BRL, 28%

EUR, 4%

Other, 32%

FY14 Cash Flow Breakdown by Currency Debt Market Depth and Maturities (2009 – YTD 2015)

5 & 10-year

Other Markets

http://commons.wikimedia.org/wiki/File:Flag_of_the_United_States.svg

http://commons.wikimedia.org/wiki/File:Canadian_Flag.gif

http://commons.wikimedia.org/wiki/File:Flag_of_the_United_Kingdom.svg

http://commons.wikimedia.org/wiki/File:Flag_of_Europe.svg


As a result our EUR liabilities have been a good hedge for offsetting BRL translation impact over the long run EUR market is not only significantly cheaper than BRL but also a much deeper market for loans and bonds

interest FX all-in interest FX all-in interest FX all-in

2009 0.8% 2.9% 3.8% 10.5% 32.9% 46.8% 9.7% 30.0% 43.1%

2010 0.5% -9.9% -9.4% 10.6% 3.6% 14.6% 10.1% 13.5% 24.0%

2011 1.1% -1.5% -0.3% 12.5% -9.3% 2.0% 11.3% -7.8% 2.4%

2012 0.3% 2.8% 3.0% 8.8% -8.7% -0.6% 8.5% -11.4% -3.7%

2013 0.1% 4.0% 4.1% 8.5% -14.5% -7.2% 8.4% -18.5% -11.3%

2014 0.1% -11.7% -11.6% 11.5% -11.8% -1.6% 11.4% -0.1% 9.9%

2015 0.0% -7.4% -7.5% 8.4% -22.6% -16.2% 8.4% -15.2% -8.7%

2009/15 3.1% -20.2% -17.7% 96.3% -33.5% 30.6% 93.2% -13.3% 48.3%

PERIODEUR loan BRL loan

Relative cost (pos = BRL more expensive)

Much cheaper interest cost..

BRL LOAN

EUR LOAN

60

80

100

120

140

160

180

200

220

Jan

-09

Ap

r-0

9

Jul-

09

Oct

-09

Jan

-10

Ap

r-1

0

Jul-

10

Oct

-10

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

EUR has been the better option 2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

3.60

3.80

4.00

Jan-

09

Apr

-09

Jul-

09

Oct

-09

Jan-

10

Apr

-10

Jul-

10

Oct

-10

Jan-

11

Apr

-11

Jul-

11

Oct

-11

Jan-

12

Apr

-12

Jul-

12

Oct

-12

Jan-

13

Apr

-13

Jul-

13

Oct

-13

Jan-

14

Apr

-14

Jul-

14

Oct

-14

Jan-

15

Apr

-15

Jul-

15

Evolution of a USD 100 loan in BRL & EUR Euro / Brazilian Real FX (2009- YTD 15)

Data as of August 15, 2015.


HY2014 HY2015 Scope Currency Organic

8,123

8,731 (277) (967)

636

EBIT

DA

(U

SD m

illio

n)

HY2014 HY2015 Profit Nominal Growth, Interest, Taxes & Non-Cash

Change in Working Capital

Pensions, Provisions,

Interest and Dividends

4,714 4,721 (262) 156 99

Cas

h F

low

fro

m

Op

erat

ing

Act

ivit

ies

(USD

mill

ion

)

Organic +7.6%

Nominal -7.0%

Nominal -0.2%

The Holistic Risk Management combined with strong Core Working Capital Management have been able to offset the majority of recent FX Volatility versus USD

10

Note: As of 08/18/15 excluding approximately $2.2bn of USD and EUR commercial paper. Yellow Liquidity tower is $16.6bn USD, which consisted of $8bn available under committed long-term credit facilities and $8.6bn of cash, cash equivalents and short-term investments in debt securities less bank overdrafts, less approximately $2.2bn of USD and EUR commercial paper.

(a) Cash available for dividends, interest, debt reduction, share buy-backs, and M&A. Calculated using reported (i) Cash flow from operating activities before changes in working capital and use of provisions plus changes in working capital, pension contributions, net capex, and income tax expense as a proxy for cash taxes


$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

BRL CAD GBP EUR USD

FY 2014 Cash Available(a)

Debt Maturity Profile

The outcome is a healthy debt maturity profile balancing currency, cash flow generation and capital market liquidity…. We have further optimized our debt maturity profile, having used the bond market to extend duration and manage refinancing risk

Note: 2006 and 2007 are InBev standalone leverage as reported in 20F. 2008 is per AB InBev 1H09 press release. HY13 assumes 12 months of EBITDA of Modelo. FY’14 leverage assumes full-year ownership of Oriental Brewery. Reported figured was 2.27x

€ 0.72

€ 2.44

€ 0.28€ 0.38

€ 0.80

€ 1.20

€ 1.70

€ 2.05

€ 3.00

1.30x1.00x

4.70x

3.73x

2.85x

2.26x1.94x

2.16x 2.26x

€ 0.00

€ 0.50

€ 1.00

€ 1.50

€ 2.00

€ 2.50

€ 3.00

€ 3.50

0.00x

0.50x

1.00x

1.50x

2.00x

2.50x

3.00x

3.50x

4.00x

4.50x

5.00x

2006 2007 2008 2009 2010 2011 2012 2013 2014

Net Debt / EBITDA

Dividend (EUR / Share)

Leverage & Dividends

Cumulative $28bn of debt paid down

*


….which, combined with our risk management policies, has allowed ABI to balance deleveraging with cash returns to shareholders After the AB combination our shareholder structure allowed for the flexibility to reduce our dividend payout in order to meet our 2012 deleveraging commitments

• Investment in organic growth of the business

• Selective M&A, strict financial discipline

• Dividend yield comparable with other consumer goods companies (3% - 4%)

• Optimal capital structure of approximately 2x Net Debt/EBITDA

• At a level of around 2x, the return of cash to shareholders is expected to be comprised of both dividends and share buybacks

13

Our focus on cash generation is accompanied by clear and consistent Capital Allocation priorities


Technology driving topline growth


14


Connected POC

Consumers

Consumer 1to1

POCs | Retailers

All Mobile

Distributors

Employee

Sup

plie

r

Sup

plie

r G

atew

ay

Global ERP

Supplier Relationship Mgmt

Global Export

ZBB Next Generation

Analytics & Insights

Risk Management

People Transformation

TOP

LIN

E G

ate

way

Management

Operational Excellence

Network of Centers

IT Operations Standardization

Automation

Routine Mgmt

Data Integration

& MDM

Contact Model

The Technology team: Building platforms to sell and interact with our consumers, digitalize the

relationship with our POCs & retailers and optimize product distribution to the market

15


ABI Ecosystem

Connected POC

Consumers

Consumer 1to1

POCs | Retailers

All Mobile

Distributors

Employee

Sup

plie

r

Sup

plie

r G

atew

ay

Global ERP


Global Export

ZBB Next Generation


Risk Management


TOP

LIN

E G

ate

way

Management


Network of Centers


Automation

Routine Mgmt

Data Integration

& MDM

Contact Model

16


B2C: Building out solutions to secure our position as e-retailers and couriers as we develop proprietary

B2C platforms

• 3 main E-commerce channels

– Existing retailers

– Courier models

– Own e-commerce platforms

• Mexico: own platform (ModeloNow) to deal with license challenges

• Delivery in 45 minutes with Modeloramas as warehouses

• E-retailers: optimize design and search interfaces (e.g. ‘food and beer pairing’)

• Courier Model: features like promotions, linked ads and consumer data

• Own Platforms: direct sales to consumers with order capturing, delivery tracking & payments

1

2

3

What? Reasons to Believe Scale Up

CHOOSE A PACK SIZE >

330 ml bottle Stella Artois 4.8%

Experience at Home

17


B2B: Building a global platform which will ‘digitalize’ our relationship with POCs, enhancing sales force

productivity and transferring certain activities to the POC


POC Material

Product Ordering

Continuous Replenishment POS Integration

Delivery tracking

• B2B solution: POC material ordering, entertainment scheduling, content delivery and beer ordering

• 10X: loyalty platform, delivery tracking and connection to POS for automatic replenishment

• Pilot markets: promising results in terms of adoption

• Global B2B platform to be launched in all key markets

18


Mobile: Sales forces are becoming more segmented and specialized. Mobile technology will drive sales

productivity improvements and support the “sales rep of the future” focus on high value-added activities


• Technology: augmented reality, GPS tracking, social media, image recognition, bluetooth assets tracking, crowdsourcing

• Productivity gains

• Sales rep of the future

POC Mapping

Find POCs on the go Self Assessed

Digital image recognition

19


Connected POC: Connect touch points in a POC with our products, our consumers and other

stakeholders to improve the beer experience and collect all valuable insights

KTV APP Select Music Order beer Experience

Bud KTV is an example of the connected POC potential in our Chinese market

20


ABI Ecosystem

Connected POC

Consumers

Consumer 1to1

POCs | Retailers

All Mobile

Distributors

Employee

Sup

plie

r

Sup

plie

r G

atew

ay

Global ERP


Global Export

ZBB Next Generation


Risk Management


TOP

LIN

E G

ate

way

Management


Network of Centers


Automation

Routine Mgmt

Data Integration

& MDM

Contact Model

21


Stepping up Analytics & Insights: focusing on understanding our consumers, brand, SKU and

customer profitability and mix management and building diagnostic, predictive and prescriptive insights


• Create one single source of truth

• Guided diagnostics, predictive & prescriptive analytics that delivers actionable insights

• Consumer Insights platform: understand our consumers and drivers for consumption;

• Bud lab: conjoint analysis and industry forecast modelling.

• Bud Lab: ‘Crack the code’

• Service centers: provide standardized, best-in-class services at maximum scale and deliver new capabilities

Bangalore Analytics

22


Summary

• We are building platforms to sell and interact with our consumers, digitalize the relationship with our POCs & retailers and optimize product distribution to the market

• We are using B2C, B2B, Mobile and Connected POC concepts to drive top line growth

• Our analytics capabilities are evolving to help us better understand our consumers to drive brands, SKUs and mix management and build diagnostic, predictive and prescriptive insights

• The Finance and Technology teams will be important partners in driving the Top Line Growth agenda

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felipe dutra - home | ab inbev · 2018-06-28 · •role of financial discipline in our business...

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