Anheuser-Busch InBev SA/NV — FY2020 Form 20-F
Period and scope. This is an annual report for the fiscal year ended December 31, 2020, not a stand-alone fourth-quarter filing. Financial statements are audited and prepared under IFRS, in U.S. dollars. AB InBev is a global brewer and beverage company, with 531 million hectoliters of reported volume and operations in nearly 50 countries. The Australian business was sold in June 2020 and is presented as discontinued operations.
Key financial metrics
| Metric | FY2020 | FY2019 | Change or context |
|---|---|---|---|
| Revenue | $46.881 billion | $52.329 billion | Down 10.4%; currency translation reduced 2020 revenue by $3.410 billion |
| Volumes | 530.6 million hl | 561.4 million hl | Down 5.5%; own beer volumes fell 5.8% |
| Gross profit / margin | $27.247 billion / 58.1% | $31.967 billion / 61.1% | Margin calculated from reported figures |
| Operating profit (EBIT) / margin | $9.620 billion / 20.5% | $16.098 billion / 30.8% | Down 40.2%; includes $3.103 billion of exceptional charges |
| EBITDA, as defined | $16.951 billion | $20.755 billion | Down 18.3%; non-IFRS measure |
| Profit for the period | $2.202 billion | $10.414 billion | Includes discontinued operations |
| Profit attributable to AB InBev equity holders | $1.405 billion | $9.171 billion | Basic EPS $0.70 versus $4.62 |
| Profit from continuing operations | $147 million | $9.990 billion | Continuing-operations EPS was a loss of $0.33 |
| Operating cash flow | $10.891 billion | $14.036 billion | Down 22.4% |
| Net debt | $82.722 billion | $95.541 billion | Down $12.8 billion |
| Cash and short-term investments, net of overdrafts | $15.247 billion | $7.169 billion | Total liquidity, including committed facilities, was $24.3 billion |
| Interest-bearing loans and borrowings | $98.559 billion | $102.974 billion | 93.4% fixed-rate and 6.6% variable-rate after hedging |
Material changes and drivers
- COVID-19 restrictions, especially closure or curtailment of bars, restaurants and other on-premise outlets, drove volume declines in most regions. South America volumes grew 3.3%, but Middle Americas fell 9.5%, EMEA 11.3% and Asia Pacific 12.4%.
- Excluding acquisitions and disposals, currency translation and the changed presentation of Brazilian tax credits, revenue declined 3.7%; revenue per hectoliter increased 2.1%, reflecting revenue management and mix.
- Unfavorable currency translation reduced operating profit by $593 million. Foreign-exchange translation also reduced equity attributable to shareholders by $9.943 billion.
- Operating cash flow was lower, while investing cash flow benefited from $10.838 billion of net proceeds from the Australia sale. Net capital expenditures were $3.687 billion, down from $4.854 billion.
- Management used the Australia sale proceeds and approximately $11 billion from bond issuances in liability management, reducing gross debt maturities over the next five years by about $18 billion and extending weighted average maturity from 14 years to more than 16 years.
Unusual items, outlook and risks
- Impairment and other exceptional items: AB InBev recorded a non-cash $2.5 billion goodwill impairment for South Africa and Rest of Africa, $182 million of COVID-related costs, and other restructuring and disposal charges. The annual fourth-quarter impairment test led to no further goodwill impairment.
- Australia disposal: The sale generated a $1.919 billion exceptional gain in discontinued operations. Australia contributed $2.055 billion of reported discontinued-operations profit for 2020, including the disposal gain.
- Brazilian tax credits: Ambev recognized $481 million in other operating income and $315 million in finance income related to tax credits and interest. The filing says comparable prior-period amounts were reported in revenue and were not restated.
- Reported versus adjusted earnings: Management reported underlying EPS of $2.51, versus basic EPS of $0.70. Underlying EPS excludes specified exceptional, hedging, hyperinflation and discontinued-operation effects; it is a non-IFRS measure.
- 2021 outlook: Management expected meaningful improvement in top- and bottom-line results, with growth from volume and price. It cautioned that adverse channel and packaging mix, transactional foreign exchange and commodity headwinds would pressure adjusted EBITDA margin. Expected 2021 net capital expenditure was $4.5–$5.0 billion; average gross debt coupon was approximately 4.0%. Management’s outlook remained contingent on uncertain pandemic developments.
- Liquidity and leverage: Management stated working capital should be sufficient for the following 12 months and identified deleveraging as a priority. Its target capital structure remained net debt to adjusted EBITDA of around 2x. Credit ratings were BBB+ (negative outlook) from S&P and Baa1 (stable) from Moody’s as of the report date.
- Contingencies and other risks: The filing describes substantial possible, unprovided Ambev tax exposures, including Brazilian income and social contribution matters. Aggregate possible tax losses were reported at $15.582 billion at year-end 2020; management considered these possible rather than probable. Other key risks include pandemic disruption, currency and emerging-market exposure, commodity and water costs, high debt, litigation, regulation and goodwill impairment.
Most important facts for investors to verify
- Review the audited statements and notes for the reconciliation of continuing-operations losses, discontinued-operations profit and the Australia disposal gain.
- Confirm the drivers and sustainability of operating cash flow, cash balances, net-debt reduction and the stated deleveraging target; assess debt maturities, refinancing needs and currency exposure.
- Assess the likelihood, timing and potential financial impact of Ambev’s disclosed possible tax losses and other material litigation or regulatory matters; provisions are not recorded for matters classified as possible.
- Track recovery in on-premise sales, regional volumes and mix, and compare actual performance with the 2021 outlook and stated margin headwinds.
- Evaluate the $2.5 billion goodwill impairment assumptions and the sensitivity of goodwill and indefinite-lived brands to future trading conditions and discount rates.