Anheuser-Busch InBev SA/NV — FY2023 Form 20-F
Reporting period: Year ended December 31, 2023, with comparisons to FY2022. This is an annual report, not a standalone Q4 filing; the supplied text does not provide a clear standalone Q4 income statement. Financial statements are audited and prepared under IFRS in U.S. dollars.
Business context
AB InBev is a global brewer and beverage company operating across five geographic regions, with more than 500 beer and malt-beverage brands and non-beer activities. It reported 585 million hectoliters of total volume and 154,540 employees at year-end. Developing markets represented about 64% of revenue.
Key financial metrics
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $59.38bn | $57.79bn | +2.8% |
| Volumes | 584.7m hl | 595.1m hl | -1.7% |
| Gross profit | $31.98bn | $31.48bn | +1.6% |
| Profit from operations | $13.97bn | $14.52bn | -3.8% |
| Profit for the period | $6.89bn | $7.60bn | -9.3% |
| Profit attributable to AB InBev equity holders | $5.34bn | $5.97bn | -10.5% |
| Normalized EBITDA | $19.98bn | $19.84bn | +0.7% |
| Operating cash flow | $13.27bn | $13.30bn | -0.3% |
| Adjusted free cash flow | $8.78bn | $8.46bn | +3.8% |
| Net debt at year-end | $67.57bn | $69.71bn | Down $2.14bn |
Gross margin was approximately 53.9% versus 54.5% in FY2022; operating margin was approximately 23.5% versus 25.1%; and net margin was approximately 11.6% versus 13.1%. These percentages are calculated from reported figures. Basic EPS was $2.65, down from $2.97; underlying EPS, a non-IFRS measure, was $3.05 versus $3.03. Net debt was about 3.4 times Normalized EBITDA, calculated from reported values, compared with management’s stated optimal target of around 2 times.
Cost of sales rose 4.1% to $27.40bn, while SG&A increased 3.5% to $18.17bn. The company attributed pressure to commodity costs, inflation, higher sales and marketing investment, and foreign-exchange effects. Interest-bearing loans and borrowings were $78.15bn, including $74.41bn of bonds and $2.83bn of lease liabilities. Cash, cash equivalents and short-term investments, net of overdrafts, were $10.31bn; total liquidity including committed facilities was $20.5bn. About 96.8% of interest-bearing financial liabilities were fixed-rate after hedging.
Material changes versus FY2022
- Revenue increased despite lower volumes: excluding acquisitions, disposals, classification changes and currency translation, revenue grew 7.8% and revenue per hectoliter rose 9.9%. Reported revenue included a negative $2.74bn currency-translation impact, including hyperinflation accounting.
- Normalized EBITDA grew 0.7% reported and 7.0% excluding specified structural and currency effects. Profit from operations fell 3.8%, while profit attributable to equity holders declined 10.5%.
- Volumes fell 12.2% in North America, primarily reflecting the U.S. decline following negative publicity affecting Bud Light. Volumes grew 4.3% in Asia Pacific and 0.7% in Middle Americas; South America declined 1.1% and EMEA 0.6%.
- North America revenue declined 9.0%; Middle Americas increased 15.3%, South America 3.8%, EMEA 5.8%, and Asia Pacific 4.5%.
- Exceptional operating costs increased to $624m from $251m, including a $300m loss on the U.S. disposal of eight beer and beverage brands and associated assets to Tilray, restructuring costs, and a $66m South Korean customs audit claim. Exceptional net finance cost was $69m, versus $829m of exceptional net finance income in FY2022.
- Net debt declined by $2.1bn. Cash from operations was broadly flat, while adjusted free cash flow increased as capital expenditure declined.
Outlook, risks and unusual items
- Outlook: Management expects 2024 net capital expenditure of $4.0bn–$4.5bn and an average gross debt coupon of approximately 4%. It states working capital and expected operating cash flows should cover short-term needs. The filing does not provide a specific 2024 revenue, volume or profit growth forecast.
- Capital returns: The Board proposed a FY2023 dividend of €0.82 per share, subject to shareholder approval. The company also authorized a share repurchase program of up to $1bn through October 31, 2024; it repurchased 6.1m shares for $362m in 2023.
- Argentina and currencies: Argentina’s reported inflation was approximately 211.8% in 2023. Hyperinflation accounting reduced reported revenue by $717m and Normalized EBITDA by $314m. Currency translation overall reduced revenue by $2.74bn and operating profit by $879m.
- Debt and liquidity: Management prioritizes deleveraging and targets net debt/Normalized EBITDA of around 2x. Refinancing costs, ratings changes, interest rates, currency movements, and limits on cash transfers from subsidiaries remain risks. S&P and Moody’s ratings were A- and A3, respectively, both with stable outlooks as of the filing date.
- Legal and tax contingencies: The filing describes significant unresolved tax matters, especially at Ambev in Brazil. Disclosed possible losses include approximately $5.7bn for interest-on-equity deductions, $2.9bn for foreign-tax deductions, $2.2bn for ICMS-ST, and $1.3bn each for certain Manaus Free Trade Zone and goodwill matters. These amounts are described as possible exposures, not recorded provisions; some risks were reclassified as remote following Brazilian legislation. Separate South African tax assessments and a Tanzanian assessment are contested and unprovided. The Belgian excess-profit ruling case remains under appeal; $75m was provided for the related matter.
- Other notable items: Anadolu Efes agreed to acquire AB InBev’s non-controlling interest in AB InBev Efes; closing requires approvals, and no amount is payable at closing. The $1.14bn non-cash impairment of that investment was recorded in FY2022, not FY2023. Goodwill was $117.0bn and indefinite-lived intangible assets were $38.2bn; no goodwill impairment charge was warranted in 2023, though a 1 percentage-point adverse WACC change would eliminate Colombia’s impairment headroom and imply $0.4bn negative headroom.
- Business and operating risks: The filing highlights inflation, commodity and energy costs, water availability, geopolitical conflict, sanctions, changing consumer preferences, alcohol regulation, competition, litigation, cyber threats, and climate-related risks. Management reported several cybersecurity incidents in 2023 but no material impact. The stated 2025 target for no- and low-alcohol products is unlikely to be met: such products below 3.5% ABV represented 6.8% of beer volume in 2023 versus a 20% target.
Most important facts for investors to verify
- Whether volume and revenue-per-hectoliter trends improve, particularly in the U.S. after the Bud Light disruption, and whether pricing can offset cost inflation without further volume losses.
- How much of reported and underlying earnings and cash generation depends on non-IFRS adjustments, hyperinflation accounting, tax credits, and other unusual items.
- Progress toward the company’s approximately 2x net-debt/Normalized-EBITDA target, debt maturities and refinancing costs, and the availability of subsidiary cash for parent-company obligations.
- Developments, provisions, and potential cash settlements in the major Brazilian, South African, Belgian, and other tax and legal matters; confirm that disclosed possible losses are not treated as recorded liabilities.
- Completion and economic consequences of the AB InBev Efes disposal, and shareholder approval and payment of the proposed €0.82 dividend.
- Assumptions supporting the $4.0bn–$4.5bn 2024 capex outlook and the sensitivity of goodwill valuations, particularly Colombia, to discount rates and operating forecasts.