Anheuser-Busch InBev SA/NV Q1 FY2025 Earnings Call

Welcome to AB InBev's First Quarter 2025 Earnings Conference Call and Webcast. Today, we have Mr. Michel Doukeris, Chief Executive Officer, and Mr. Fernando Tennenbaum, Chief Financial Officer, hosting the call. To access the slides for today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab under Reports and Reports Centers. The webcast will also be available for on-demand playback later today. All participants will be in listen-only mode, and we will open the floor for your questions after the presentation. Some of the information shared during this conference call may include future expectations and other forward-looking statements based on management's current views and assumptions, which involve known and unknown risks and uncertainties. Actual results and financial conditions may materially differ from the anticipated outcomes outlined in these forward-looking statements. For more information on the risks and factors that could impact AB InBev's future results, please refer to the risk factors in the company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission on March 12, 2025. AB InBev does not commit to updating or revising any forward-looking information shared during the call and is not liable for any actions taken based on that information. Now, I will hand over the floor to Mr. Michel Doukeris. Thank you. You may begin.

Thank you, and welcome, everyone, to our first quarter 2025 earnings call. It is a great pleasure to be speaking with you all today. 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 this quarter. After that, we'll be happy to answer your questions. Let's start with the key highlights. The global momentum of our business continued with the consistent execution of our strategy, delivering another quarter of reliable growth. EBITDA grew by 7.9% at the top end of our outlook range with continued margin expansion. In the U.S., our portfolio is building momentum and has reached an inflection point, and we are increasing investments in our brands to fuel this momentum. Our no-alcohol beer portfolio continued to outperform globally, increasing revenues by 34%. The beer marketplace continued to scale, increasing GMV by 53% versus last year to reach $645 million. And the ongoing optimization of our business drove a 7% increase in underlying U.S. dollar EPS, with 20% growth in constant currency terms. Turning to our operating performance. Our overall volume performance was impacted by calendar-related factors, such as cycling the leap year and the later timing of Easter, resulting in a volume decline of 2.2%. We estimate these technical calendar shipments accounted for a majority of our volume decline this quarter. Despite these technical factors impacting volume, our revenue increased by 1.5% as the strength of our brands portfolio and ongoing premiumization drove a revenue per hectoliter increase of 3.7%. Our diversified geographic footprint enables us to deliver consistent results and has us well placed to drive long-term value creation. Revenue increased in approximately 50% of our markets and double-digit bottom line growth in the Middle Americas, South America, Africa, and Europe drove overall EBITDA at the top end of our outlook. Now I'll take a few minutes to walk you through the operational highlights for the quarter from our key regions. Starting with North America. In the U.S, our portfolio is building momentum and has reached an inflection point, and we are increasing investments in our brands to fuel growth. We gained volume market share of both the beer industry and spirits-based ready-to-drink category. In beer, Michelob Ultra and Busch Light were the top two volume share gainers in the industry for the second quarter in a row. And in spirits-based RTDs, our portfolio grew volumes by strong double digits led by Cutwater and Nutrl. While our portfolio continued to gain share, adverse weather in the later time of Easter impacted the overall industry performance in the first quarter. I thought it would be helpful to bring some data to the conversation so that we can look at it together. According to Circana, off-premise sales to consumer volumes declined by 4.7% and dollar sales by 2.9% versus the historical range of around 1% to 2% in volumes and flat dollar sales. When we disaggregate the industry growth on a week-by-week basis, our analysis indicates that the majority of the underperformance this quarter was driven by adverse weather in the later time of Easter. When we look to April, we are encouraged that the industry has improved with better weather and the Easter shift contributing to volumes aligning more closely with the historical trends. The summer season is an important period for the beer industry, and we look forward to building on the momentum of our portfolio and activating the category through our mega platforms. Now moving to Middle Americas. In Mexico, the underlying industry momentum continued with our business delivering mid-single-digit revenue growth and double-digit EBITDA growth. Volumes declined by low-single digits in line with the industry, which was impacted by calendar-related factors. In Colombia, record-high volumes and margin expansion drove double-digit EBITDA growth. In South America, our business in Brazil delivered record-high volumes for both beer and non-beer. Total volumes increased by 1.4%, with continued margin expansion, driving double-digit bottom line growth. In Europe, continued premiumization of our portfolio and further margin recovery drove double-digit EBITDA growth. Our premium and super-premium brands contributed 60% of our revenue this quarter with performance led by Corona and Stella Artois. In South Africa, the underlying momentum of our business continued, gaining share in both beer and beyond beer. Revenue and EBITDA grew by low-single digits with our performance driven by our premium and super-premium brands, which grew volumes by low teens. In China, the industry improved sequentially. However, we underperformed primarily driven by softness in our key regions and the on-trade channel. We remain confident in our strategy, and we are focused on strengthening our execution by increasing discipline and excellence in our route-to-market, increasing investments in our mega brands, accelerating our expansion in the in-home channel, and scaling up key innovations such as Harbin Zero Sugar. Now let's look at the key highlights of our three strategic pillars. Starting with leading and growing the category. We have evolved our portfolio management approach to focus our investments in our mega brands to drive efficient, profitable growth. We have around 50 mega brands globally, typically five per market, and these brands continue to lead our growth with net revenue increasing by 4.4%. Our global mega brand, Corona, continues to drive premiumization across our markets, growing revenue by 11.2% outside of Mexico. 2025 marks the 100th year anniversary since Corona's launch, and we just kicked off the celebration with an event on Copacabana Beach with over 2 million fans in attendance. We are looking forward to executing a strong lineup of activations around the world throughout the entire year in recognition of the heritage, premiumness, and quality of the brand. This quarter, Corona volumes grew by double digits in over 30 markets globally. In its home market of Mexico, Corona is the #1 brand, and volumes grew by mid-single digits. The brand power and consumer preference for Corona have earned the right for a premium price point. Corona sells on average a 20% premium to the nearest competitor. And to crown its 100-year anniversary, Corona was again named the most valuable beer brand in the world in 2025. Through the consistent execution of our category expansion levers, we are increasing category participation across our markets by offering superior core brands, innovating in balanced choices to provide consumers with no and low alcohol, low carb, zero sugar, and gluten-free options, and expanding our premium and beyond beer portfolios. As a result, on a rolling 12-month basis, participation of legal drinking age consumers with our portfolio increased by 60 basis points across our key markets, the equivalent of adding 6 million new consumers to our ecosystem. In non-alcohol beer, our portfolio momentum continued to accelerate with volumes growing by 34%, led by the triple-digit growth of Corona Cero. While no alcohol beer is currently a relatively small portion of our global volume, we are leaders in more than 50% of our key non-alcohol markets and estimate we are gaining share in 75% of them. With 65% of the volume coming from new consumers and new occasions, we believe no-alcohol beer is a key opportunity to develop the category and drive incremental volume growth. Let's now turn to our second strategic pillar, digitize and monetize our ecosystem. In the first quarter, BEES captured $11.6 billion in GMV, a 10% increase versus last year, with 32 million orders transacted through the platform. This marketplace continues to scale, with GMV increasing by 63% versus last year to reach $645 million. In DTC, our digital platforms are enabling a one-to-one connection with our consumers and the development of new consumption occasions. Our digital platforms generated 19.2 million orders, with revenue increasing by 12% to reach $117 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. Good morning, good afternoon, everyone. I'll take a few minutes to discuss the progress we have made in optimizing our businesses. Our EBITDA margins improved by 218 basis points this quarter with expansion in four of our five operating regions. We know that each year will be different, but we are confident the combination of our leadership advantages, disciplined revenue management, continued premiumization, and efficient operating model create an opportunity for further margin expansion over time. Moving on to EPS. We delivered underlying EPS of $0.81 per share, a 7.1% increase in U.S. dollars and a 20.2% increase in constant currency versus last year. Organic EBITDA growth accounted for a $0.16 per share increase with translation effects and a $0.09 per share headwind. Lower net interest expense and the optimization of other below EBITDA items, such as the cost of hedging and FX losses, drove the balance of our EPS growth. Let me take a moment to talk about our operations. Our business is local. We procure, produce, distribute, and sell locally. In fact, more than 98% of the volumes we sell are locally produced. If you look specifically at the U.S., as an example, we have 18 breweries, over 700 American farmers, and over 7,000 local suppliers, with 99% of our volumes locally produced. As a result, we have limited direct exposure to tariffs. Our results in the first quarter, the resilience of the beer category, the strength of our mega brands, and the continued momentum of our businesses all reinforce our confidence in our ability to deliver on our 2025 outlook of 4% to 8% EBITDA growth. With that, I would like to hand it back to Michel for some final comments before we start our Q&A session.

Thanks, Fernando. Before opening for Q&A, I would like to take a moment to recap the quarter and look ahead at the opportunities our brands have to activate the category this year. We are encouraged by our first quarter results and we delivered EBITDA growth at the top end of our outlook. Underlying EPS increased by high-single digits in U.S. dollars and by 20% in constant currency, driven by organic growth and the ongoing optimization of our business. And as Fernando just mentioned, our first quarter results position us well to deliver on our outlook for the year. Looking ahead to the summer and the rest of the year, we are uniquely positioned to activate the category. The combination of our mega brands with the key global platforms that consumers love and that bring people together is a powerful opportunity to lead and grow the category. From the NBA to celebrating 100 years of Corona around the world, to the FIFA Club World Cup, to the buildup of the Winter Olympics and music platforms like Tomorrowland and Lollapalooza. We will be focused on connecting with consumers and bringing to life our purpose of creating a future with more cheers. With that, I'll hand it back to the operator for the Q&A.

Thank you. We'll now begin the question-and-answer session. Our first question today is from Rob Ottenstein at Evercore ISI. Your line is now open.

Great. Thank you very much, and congratulations on a strong quarter. So I was wondering if, Michel, you could discuss your U.S. strategy and maybe put it in the context of the overall company. So kind of first, it looks like you've gained share now for the second or third quarter in a row. What's driving that? And does that look sustainable? Second, can you give us any color on your productivity programs that you've put in place? And will they build over the year so that you can get to more flat EBITDA? And then kind of tying it all together, you noted in the press release that you continue to increase investment in the U.S.; why does that make sense in what looks like a mature and declining market, given the other opportunities that you have around the world to invest? Thank you very much.

Hi, Robert. Good morning, and thanks for the question. It's an interesting one with a couple of components that I will try to cover all of them. I think that first, the U.S. is one of our key markets. It represents over 20% of the business that we have and we always talk about this as a mature market, very big and profitable, with a lot of headroom for growth as our portfolio reaches an inflection point. And I think that this covers the part of the market share gain. We talked about this in quarter four last year and we saw this momentum building. And as a matter of fact, if you look at the latest weeks, the momentum continues to build as our balanced choices portfolio with Michelob Ultra, Michelob Ultra Zero, and Busch Light as the number two brand continues to gain momentum. The innovation pipeline that we've been launching this summer will further support that. And in the RTD, the choices we made behind Nutrl and Cutwater continue to build momentum and accelerate with strong double digits. In terms of productivity, this is always on for us. We made the decision not to launch new productivity initiatives, but we are working steadily on improving productivity quarter after quarter. And this is kicking into our results; as you can see, we continue to improve. In terms of investments, I think that is very logical. One, as the portfolio is at this inflection point, we are feeling the growth. There's a lot of headroom for growth for our portfolio. Second, we are in this business for the long term, right? Three years ago, we said we would get into this multi-year investment growth in marketing that would fuel the growth of our brands, and that's not a one-year program; it's a multi-year program. We have massive upside as these brands that are growing continue to gain scale and more reach and penetration with consumers. It only makes sense to support the growing part of the portfolio and the sustaining part of the portfolio. Momentum is good for our team now in the U.S. This summer, we will have a lot of activation, from FIFA to the Club's World Cup to the finals of the NBA that are on fire now, and the innovation that we have in the pipeline is going to connect with the NFL and later in the year with the Olympics. It's a very good lineup for the year in the U.S. We are encouraged by the results we've seen with share. The industry in April, as I shared here in the call, is much more normal, and we know that summer is going to be intense and good for the industry because last year was subdued. Thanks for the question.

Thank you. Next question today is coming from Sanjeet Aujla from UBS. Your line is now live.

Hey, Michel, Fernando, a couple for me, please. Firstly, on China, it seems like the beer industry is sequentially less negative. You're clearly still underperforming, but can you give us a sense of where your channel mix is today? You've had a reset presumably in the on-trade channel. Is the off-trade now a bigger part of your mix, or is the on-trade still bigger? And then just taking a step back, clearly, you had some big macro challenges in a couple of markets over the last four months. But how are you thinking about your ability to get back to positive volume growth going into Q2 and the second half of the year at the group level? Thank you.

Hey, Sanjeet, good morning. Thanks for the question. First on China, I think that you are right. The industry has been improving sequentially. And I think that the more we approach summer and the back end of the year, the more we see a normalized industry. Channel-wise, the on-trade remains a weaker segment with a good off-trade performance. And of course, the more you cycle the on-trade, the more it will exert a less negative impact, and the strength of the off-trade will contribute positively to the industry overall. We're still facing some challenges with the footprint that we have because the Center-West part of the market in China is still performing better than the Eastern part. However, this will also cycle as we go through the summer. We have a lot to do in China ourselves because we continue to believe that our business can perform better than what is currently happening despite the negative footprint impact. We are increasing our execution efforts with more discipline in our route-to-market and overall execution. We are also increasing investments behind our mega brands, especially Budweiser and Harbin, and preference power is moving in the right direction; SPRs on these brands are moving positively. However, there's still more to do. We are accelerating the expansion in the off-trade; there are massive opportunities there. By focusing more on our execution in the off-premise space, we expect to see better results. Moreover, innovation in China, such as Harbin Zero Sugar, is scaling up very quickly, and I believe we will have a great summer with Harbin and this innovation. If you consider the macro perspective, look at the quarter one volume performance. If you exclude the leap year effects, the results show a growth of over 1%. If you take into account the Easter shift, it could range from 0.3% to 0.5%. So the underlying volume momentum looks promising, and I see volume performance improving significantly as we head into quarter two and the rest of the year.

Great, thank you.

Thank you. Thanks for the questions.

Thank you. Your next question today is coming from Simon Hales from Citi. Your line is now live.

Thank you. Hi, Michel, hi Fernando. So a couple for me as well then, please. Michel, obviously, one of your big competitors today has just lowered the full-year guidance after a tough quarter. I appreciate your performance was certainly very different in Q1, and there are probably a number of specific factors that are impacting their business for the full year. But I wonder how you're viewing just the broader consumer environment now as we look forward into sort of the rest of 2025, given the increased macro uncertainty we've seen over the last couple of months. How are you thinking about that as perhaps evolved since you last updated us with the Q4 in February? And then maybe just following on from that and specifically going back to the U.S., I wonder if you could just talk a little bit more about the momentum you've seen around some of your new launches like Michelob Ultra Zero in Q1? How we should think about that as we head into the more important summer months? And any other key innovations you're excited about for the U.S. business, specifically in Q2 and Q3?

Hi, Simon. Good morning. Thanks for the question. You asked a couple of points, and I will address them one by one here, and maybe Fernando wants to comment as well on the outlook. Overall, we didn't change our outlook. Our outlook remains the same. I think that we are encouraged by the quarter one delivery. Our outlook for the year is still 4% to 8% with the information we have at this point. On the macro side and consumer behavior—this part of your question—are being monitored closely. There is a distinction between consumer sentiment and consumer behavior. While there's been a lot of talk about consumer sentiment decreasing, leading to increased caution, it's crucial for us to also consider consumer behavior. What we see on the consumer behavior side is that beer remains more resilient than some other categories. It's an affordable category that consumers purchase every day. We've been actively promoting the category during key moments, and participation holds strong. As I mentioned, our brand participation grew, adding the equivalent of six million new consumers in the last quarter. Therefore, beer remains resilient overall, and the underlying demand for our brands is robust. Regarding innovation, non-alcoholic products are playing a significant role for us. Our portfolio has seen over 30% growth, with Corona Cero demonstrating triple-digit growth globally. Michelob Ultra Zero has emerged as the #1 innovation in the category this year, with market share climbing north of 0.12. We expect continued acceleration for Ultra Zero now that media campaigns have started. Currently, it's the #5 brand in the zero category in the U.S., and we anticipate it will rise further. Another exciting innovation is Busch Light Apple, which has been generating buzz and rapidly selling out in stores. We expect it to be a topic of interest this summer. So overall, we look forward to a strong summer and a successful launch of our innovations.

And Simon, Fernando here. If I could add, you asked on the outlook. On the outlook, I think Michel covered very well the top line. On our costs, two comments: first, we have hedges in place, so we have very good visibility into our cost of goods sold. There’s always a one-year delay. Last year, we saw the devaluation of emerging markets happening toward the second half of the year, meaning the first quarter would likely be the easiest comp. Later on, you can expect more pressure. But again, this is anticipated. On the translation side, you'll see an opposing effect—greater pressure in the first half and then heavier comps in the second half of the year. An important note is that our highly localized business experiences very little impact, if any, from tariffs. Combining the top line with these cost comments leads us to maintain the same outlook we had since the beginning of the year. Thank you.

That's great. Thank you very much.

Thank you. Our next question today is coming from Edward Mundy from Jefferies. Your line is now live.

Good morning, Michel. Good morning, Fernando. So two questions, please. Just in your wording around the priority to lead and grow the category. There's a bit of a nuance in your wording from occasions development to balanced choices in one of your bullets. Could you perhaps provide a bit of context into this nuance? And does this sort of reflect any change in your strategy, perhaps a bit more focused and a bit more resourced behind some of these new growth streams? And then second of all, just a question for Fernando about driving leverage through the P&L. There's been a decent drop through from EBITDA to dollar EPS, despite the FX headwind in the first quarter, below depreciation, and lower financial charges. Could you perhaps talk about the sustainability of this overall shape through the P&L?

Okay, Ed. Let me start, Fernando here, with your question. We've been discussing this, but many details show a bit of a delayed effect. We've been working on optimizing our business, as illustrated by the decline in CapEx. However, the initial steps in reducing CapEx will show through cash flow first, with depreciation following later. One component of the leverage throughout the P&L is from this aspect. Secondly, as we deleverage, you have less debt and, in turn, lower interest payments, resulting in a positive effect that flows into EPS. As we progress on lower CapEx and deleveraging, you should expect operational leverage to happen going forward. Now to your first question.

Hey, Ed. Michel here. Thanks for the question and good catch. We are not less focused on occasions, but we refined our wording because, as we interact with consumers and as our innovation pipeline comes into play, we have observed significant interaction with these balanced choices that now make up a considerable business for us—over $5 billion—with opportunities for consumers. For instance, the growth of non-alcohol beverages is evident because 60% of the consumers are either new to the category or existing beer drinkers choosing beer in more conditions. This also extends beyond just non-alcoholic beers as we perceive certain barriers for consumers with beer consumption. By solving these barriers, consumers show preference for balanced choices over other alcoholic beverages. For some markets, that may be gluten-free beers, while for others, it’s zero sugar options or low-carb organic selections. One major barrier we have eliminated is the calorie count; this is one of the reasons Michelob Ultra has thrived in the U.S. Currently, the balanced choices segment is expanding rapidly, and we are deeply investing here to open new occasions for our consumers while growing our brands in line with their evolving consumption needs. Thank you.

Great. Thank you.

Thank you. Your next question today is coming from Sarah Simon from Morgan Stanley. Your line is now live.

Yes, thanks for taking my questions. I've got two. First one was on Mexico. A lot of consumer companies have been talking about Mexico being worse. You haven't really flagged that up other than the calendar effect. I wonder if you could talk about how you're seeing the market there? And the second question was a rather broad one for Fernando. Can you just help us with scope? I was expecting a positive contribution in Europe from San Miguel in terms of volume, but we had a negative. And obviously, that goes through the segment. So just if you could help on that, please. Thanks.

Okay. So Sarah, let me take the first one, and then Mexico—I'll take the second one. On the scope, there are a few considerations—partly financial and partly related to EBITDA that Shaun can help you with later. San Miguel has just started, but it’s more about timing, and you should expect results to vary across different quarters. The key issue is financial, related to commodity carry costs and some product phasing.

On the industry in Mexico and consumer sentiment, I’ll start by emphasizing the distinction between consumer sentiment and behavior. Consumer purchase penetration is still strong in Mexico with normal interactions. Overall, the underlying trends look good. In quarter one, the volumes we saw in Mexico and the industry reflected a calendar impact as well as weather patterns affecting consumer engagement. Those adverse weather conditions persisted, similarly affecting the U.S. However, if you look past those issues, the foundational demand remains healthy. We expect that the Easter shift from quarter one to quarter two will contribute positively, providing some momentum. As we monitor the consumer environment, we feel encouraged by the category’s performance and the strong demand for our brands in Mexico.

Right. Thanks a lot.

Thank you. Next question today is coming from Chris Pitcher from Redburn Atlantic. Your line is now live.

Good afternoon. Thank you. A couple of questions for me, one in follow-up. On China, you're talking about the importance to focus on the off-trade and build premium there. I mean that's a very different proposition to building Budweiser, et cetera, in the nightclub channel. Have you got the resources on the ground? I mean, clearly, you can borrow experiences from other markets. I just wanted to understand how easy it is to transfer volume into that channel? And then secondly, we don't often talk about the underlying business in Argentina, but it certainly sounds like things are starting to improve. I mean, potentially, if inflation keeps falling, you could start to have a better backdrop there. How healthy is the Argentinian business? You've done a good job protecting dollar profitability given everything. Is that a market we should be getting more encouraged about in the coming quarters, years? Thanks.

Hey, Chris, good morning. Thanks for the question. First on China: We will continue to have a formidable business in the on-trade. Our brands are robust, and the on-trade will recover over time as consumer confidence returns. However, we recognize that the expansion in the off-trade is something we observe across all mature markets as consumers tend to prefer more home-based occasions. We view the off-trade growth as accelerating quickly in China, and the most important asset we need for increasing off-trade consumption is strong branding. Brands like Corona, Budweiser, Blue Girl, and Harbin Ice are all major players. There are, of course, adjustments needed in the sales force and route-to-market strategies, and that’s where our team is focusing right now. Looking ahead and into summer, we want to see how our volumes rebound and the success we have in capitalizing on the off-trade opportunity. Regarding Argentina, you brought up valid points. We spoke a lot about the business there last year, especially given the abnormal disruptions. The current macroeconomic situation in Argentina is showing improvement, leading to sequential industry growth. Our business has strong cash-generating brands and maintains positive market share despite the circumstances. We believe that time will reveal a recovery of consumer purchasing power, and we expect to see volume improvements gradually as the year progresses. With solid margins in place and a robust branding presence, we remain optimistic about the P&L flows in Argentina as the economy continues to stabilize.

Thank you. Your next question today is coming from Trevor Stirling from Bernstein. Your line is now live.

Hi, Michel, Fernando. Just one from my side, please. And probably a bigger picture one. There's been a huge debate going on in the USA about the extent to which younger people drink less alcohol, participate less in the category, and what that means for category growth. If you look at your big emerging markets, like Mexico, Brazil, and Colombia, are you seeing similar trends emerging, especially among more elite users, possibly influenced by the U.S., or is it business as usual?

Trevor, thank you for the question. As you know, in our business, there's rarely a day where things are just business as usual. There’s a dynamic especially apparent within consumers post-COVID; many younger individuals have adjusted their drinking behavior during their early 20s because they had fewer opportunities to gather with friends and attend social events. However, we see normalization occurring across the globe as we move into 24 and 25 cohorts. Participation rates for consumers of legal drinking age are normalizing. Age groups 24 to 35 continue to maintain healthy participation. It’s essential to perform a careful analysis across different markets, as some markets demonstrate quick penetration of non-alcoholic beers while others face macroeconomic disruptions resembling those mentioned in China or Argentina. The overall market participation is stable, with a decline for younger cohorts; however, there is a clear recovery as they progress into their late 20s. We continuously monitor these trends and work to position ourselves accordingly, enhancing our balanced choices portfolio that resonates with non-drinkers and moderate drinkers alike, delivering options that cater to various preferences—from low carb to gluten-free, as well as alcohol-free options. We are keen to meet consumers' demands with every product in our portfolio.

Thanks.

Thank you. The next question is coming from Gen Cross from BNP Paribas. Your line is now live.

Hi, Michel, hi Fernando, thanks for the questions. Just a couple on costs from me. SG&A looks like it declined by roughly mid-single-digit organically in both South America and Middle America regions in Q1. Obviously, you've got organic revenue growth in both of those regions. So I was just wondering if there's any color you could share on how you've managed to achieve a decent reduction in your SG&A expenses in those two regions? And the second one is kind of going back to actually an earlier question on finance costs, which saw quite a meaningful reduction year-on-year. Is recurring net finance costs below about below the $1 billion mark in the past couple of quarters now? And as you've commented on, Fernando, debt levels continue to come down. Do you expect to stay below the $1 billion mark per quarter going forward? Thank you.

Hi, again. On SG&A, we are continuously optimizing our cost base. We don’t announce major initiatives or efforts; rather, we’re committed to reviewing and improving our cost management daily. This consistent approach enables us to achieve SG&A reductions organically across regions. Now, regarding finance costs, we maintain a focus on ongoing optimization. As you decrease leverage, you consequently lower interest expense as well, which reflects positively on EPS as you mentioned. We'll continue these efforts moving forward but don’t provide specific guidance on future finance expenses. We do provide guidance on some of our accruals but not on what our finance expense will be in the next quarter. However, the benefits of a lower debt load and improved cash flows are evident and positively impacting our results.

Thank you.

Thank you. Your next question is coming from Olivier Nicolai from Goldman Sachs. Your line is now live.

Hi, good morning. Michel, Fernando, just two questions, please. Just a follow-up on the U.S. You have a very detailed database in the U.S. by consumer, by postcode. You flagged that April is effectively better, thanks to the weather and then the Easter timing. But do you see any consumer demographics or any specific states where you're seeing any sign of consumer weakness, considering the overall lower consumer confidence since the beginning of the year? That's the first question. Then secondly, you had a very strong margin improvement in Q1 that was driven by gross margin being up strongly. Could you give us perhaps a bit more detail on the driver behind this increase and if you think that will continue at this pace for the rest of the year? Thank you.

Olivier, let me start with your second question on the margin improvement. I think both the improvements in the margin and gross margin stem from our hedging strategies, giving us good visibility into our costs. Due to dynamics with FX and commodities last year—impacting costs—with a delayed effect, the first quarter typically experiences more tailwinds. As we proceed through the year, you can anticipate some pressures on the cost of goods sold starting in Q2 and becoming more prominent in the second half. However, we maintain our 4% to 8% outlook. While we expect to see pressure on the transactional costs of goods sold, we also expect there to be easier comps in the second half of the year due to prior devaluation influences. I’ll let Michel further address your first question.

Hi, Olivier, Michel here. Regarding the U.S., we included a page in the webcast to help visualize the discussions, particularly using public data from Circana. This data indicates a healthier industry in April. January presented more typical numbers with cold weather and precipitation affecting overall performance. From a consumer perspective, participation seems stable. Our brands have gained traction in the U.S., representing a positive sign for us thus far this year. We have a diverse portfolio that covers various price points. Last year, we responded proactively to inflation and consumer behaviors, positioning our brand offerings accordingly—from premium to strong value products. It’s no surprise that Busch Light ranks as the #2 brand now for consecutive quarters. Given our portfolio's strength, we can accommodate the current market environment and cater to a price-sensitive consumer base. To summarize, while we encountered weather-related impacts in Q1, we're eager to see the results for Q2 as our brands gain market share.

Thank you very much.

Thank you. Our final question today is coming from Mitch Collett from Deutsche Bank. Your line is now live.

Hi, Michel, hi Fernando, just a quick question on Beyond Beer, which accelerated to a 16% growth this quarter from low single digits in 2024. What drove that acceleration? And can you sustain it? You're clearly benefiting from the growth in the ready-to-drink cocktails in the U.S.; I'm sure that's a contributor. But where else are you excited about the opportunity in Beyond Beer? Thank you.

Hi, Mitch. Thank you for the question. I want to start by contextualizing that three years ago, when we discussed our strategy and identified growth opportunities, I highlighted the Beyond Beer space and the intersection with spirits and wine—incrementally adding volume to beer. Approximately two-thirds of the category volume boosts the beer category, and we’ve recognized the increased demand for convenience through smaller packaging. This is where brewers excel. We made a commitment to pursue this space to drive growth; hence we haven't fallen short of prioritizing it. As I mentioned, the strategy is about where to impact growth. We had to streamline our portfolio, which was previously too broad, and we've now focused on five global brands—Flying Fish, Cutwater, Nutrl, BEATS, and Brutal Fruit. In countries where these brands operate, they're experiencing robust growth. We’re investing heavily in expanding their reach globally while ensuring consumer demands are met for light, refreshing, as well as complex tastes. It’s an exciting and fast-growing segment for us, and we anticipate ongoing increases in volume through these innovative brands accelerating our positive impact on the bottom line.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you. Thanks, everybody. Thank you for your time today, for the ongoing partnership and support for our business. Stay safe and well, and we'll talk soon. Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.