Budweiser Brewing Company APAC Limited

Thank you, Ari, and good morning, everyone. Thank you for joining today's call.

We entered 2026 with a clear focus on recovering volume through disciplined execution across our market. For Bud APAC total volume returned to a positive growth, supported by continued strong momentum in India.

In China, our increased investment shows a sign of progress. With the quarter-over-quarter volume decline tightening further as we remain committed to our strategy of enhancing our in-home route to market enriching our portfolio and innovating behind our mega brand to rebuild momentum.

In South Korea, we gained market share in both on-premise and in-home channels. Before we go over our financial results, I wanted to take a moment to introduce Bernardo Novick, our new Chief Financial Officer, effective from April 1 this year.

Novick joined ABI Group in 2009 through the global MB program and has worked across various functions in multiple markets. He brings deep finance and global resource allocation expertise, having led projects, delivering savings and meaningful value creation.

I'm pleased to welcome him to the Bud APAC team. Let me now hand over to Novick for a brief introduction.

Good morning, everyone. I am delighted to join the Bud APAC team.

I would like to thank you, YJ for your trust and invitation to join the team. I joined AB InBev 16 years ago and spent 5 years in finance roles, 5 years in commercial roles and 5 years in innovation roles where I led the corporate venture capital arm in New York.

Most recently, I was responsible for our global capital allocation division reporting to the global CFO. I hope I can bring this experience to grow Bud APAC's business in a profitable way.

I have already had the pleasure of meeting some of you joining the call today, and I look forward to meeting many more in the next weeks and months ahead. Let me share our financial results for the first quarter of 2026 in more detail.

In the first quarter, APAC volume returned to growth, even if it's just 0.1% after many quarters, driven by strong growth in India, and a sequential improvement in the industry and our volumes in China, with volume decline narrowing quarter-over-quarter. This progress was driven by both enhanced execution as well as increased investments across channels and our portfolio, which added temporary pressure to our bottom line.

We also maintained strong brand momentum in South Korea, despite a soft industry and a challenging comparable last year. In India, we continue to advance premiumization, delivering strong double-digit volume and revenue growth.

In summary, for Bud APAC, total volumes increased by 0.1%. Revenue and revenue per hectoliter decreased by 0.7% and 0.8%, respectively.

Normalized EBITDA decreased by 8.1%, while our normalized EBITDA margin contracted by 246 basis points. Now let me cover some of the highlights from each of our major markets.

In China, volumes decreased by 1.5%, improving sequentially with a quarter-over-quarter decline continuing to narrow since the second half of 2025. Revenue and revenue per hectoliter decreased by 4% and 2.5%, respectively, impacted by increased investment to support our wholesalers and activate our brands in the in-home and emerging channel.

Normalized EBITDA decreased by 10.9%, impacted by our top line performance and increased investments. We continue to make progress in expanding our distribution in the in-home channel, while increasing the distribution of our premium brands.

This premiumization is more clear in the online to off-line or O2O channel, which grew strong double digits in the quarter. Now let me share with you some of the investments we are making on our brands through our marketing campaigns as well as liquid and package innovations to better connect with our consumers across more occasions and increased sales momentum particularly in the in-home channel.

On Budweiser, we accelerated the national expansion of Budweiser Magnum, building on its strong consumer traction and sustained sales growth. In March, Budweiser Magnum, launched an integrated nationwide campaign, anchored by a strategic partnership with global football icon Erling Haaland, and the FIFA World Cup mega platform to drive geographic and channel expansion.

Regarding our Harbin family, we introduced Harbin 1900, celebrating its brewing heritage as the birthplace of Chinese beer. Position in the Core++ segment, which is the RMB 8 to RMB 10 price range.

This new innovation is 100% pure malt classic lager, pairing distinctive vintage packaging with a rich authentic taste. The launch reinforces Harbin's role in driving innovation and placing new bets in this growing and important Core++ segment.

In South Korea, volumes decreased by low teens and revenue decreased by mid-single digits, mainly due to a challenging comparable in the first quarter of last year, driven by shipment phasing ahead of a price increase that if you recall, was in April 2025. Revenue per hectoliter on the other hand, increased by low single digits, also comparing with the first quarter last year before the price increase.

This led to a normalized EBITDA decreasing by low teens. Having said that, we maintain a good commercial momentum in both in-home and on-premise channels, and we foresee a recovery in the second quarter.

Finally, India continues to grow and will play a bigger role in our footprint. Industry momentum continued in the first quarter, and we gained total market share.

We delivered strong double-digit volume and revenue growth led by a strong growth in our premium and super premium portfolio. We also continue to see momentum in the moderation agenda with states like Maharashtra and Karnataka introducing changes that decreased the current relative tax advantage of hard liquor versus beer.

We see this as a step in the right direction and a sign that some states understand the importance of evolving towards an alcohol tax policies that are consistent with global policy standards where high alcohol products are taxed higher than low alcohol products like beer. And with that, YJ and I are here to answer any questions that you might have.

Can you hear me now?

I'm sorry. That -- I have two questions on China.

I'll ask one by one. The first one, in the past 2 years, we have seen a few senior management leadership changes in the company.

So far is any achievement or breakthrough that the company would like to share with us with the new leadership? [Foreign Language]

I'm YJ. Let me take these questions.

So let me start in English, then let me turn to Chinese, if needed. So the changes we have, mainly happened first half year last year.

And the reason for the change is kind of retention between either global other between the region in China. So and also between Headquarter in China versus operation in the field in each sales region.

And the reason for that is to share some best practice and to further strengthen their strengths in each area or each function and also learn each other best practice sharing. So that's kind of a normal retention changes.

And to be able to share the more the answer to your question about the changes of the people. As I mentioned earlier, we keep a consistency of our strategy which is focused on portfolio, brand portfolio, which is meaning Harbin and Budweiser and also focus on in-home and market.

And third one is focus on execution. So those are the 3 strategies we set up early last year and we have no changes.

And also, you see the progress we have been made as Novick just mentioned, quarter-over-quarter on decline narrow quarter-by-quarter and see very good trends. And also, we see the execution in each area make a huge improvement, and we put a lot of effort to invest in our brand and also further focus on the in-home channel that the channel changes reached which and that's our further opportunity in our operation.

So we see starting from second quarter last year and the fourth quarter last year, and first quarter this year, the things getting improved quarter-by-quarter. So I think that's I tried to answer your question.

Shall I start a second question?

Yes, go ahead.

Okay. The second question is about the channel inventory.

As far as I can recall, the company in China start destocking the channel in 4Q '24. It has been a few quarters of destocking and I remember in the last quarterly earnings call, you mentioned that actually, our China inventory actually was young and lower versus historic level.

But we know that China is a very dynamic market and the changing areas on a daily basis. So were you foreseeing the future that the China channel inventory will be below historic level as a new norm?

Or is any factor you expect to see before you become more exciting and try to restock the channel looking forward. [Foreign Language]

Thank you for your question. You're right.

We have been proactively taking steps to adjust our inventory given the current business environment. [Foreign Language]

Thanks. Can you hear me?

Yes.

This is Liu from Goldman Sachs. Thanks for the opportunity and welcome Novick for your first earnings call with Bud APAC.

I have 2 questions. The first one is on China.

So basically, our ground check shows that there has been some volume recovery in the super premium segment, including Corona, Blue Girl in the first quarter. So how to look at the sustainability of this trend?

How to comment on the on-trade consumption recovery so far, including any color on 2Q to date on the on-trade performance in China? I will translate to Mandarin by myself.

[Foreign Language]

Let me take this question. I will start the summary of the answer first, then I'm going to talk a little bit detail in sort of answer in Chinese.

Indeed we grow Super Premium volume by double digit in the first quarter 2026 as we focus on premiumization in the in-home channel and O2O. In terms of on-trade recovery nightlife channel contribution was stable, and we grew volume in the nightlife the first quarter 2026.

However, Chinese restaurant channel remains under pressure. [Foreign Language]

The second question is to our new CFO, Novick. So I would like to know what's the 3 key focus for you this year, would you please share with the investors on the call.

Thank you so much.

Thank you, Liu. Nice to hear from you, and thanks for the question.

So let me share the 3 priorities that me and my team will focus this year. The #1 priority is growth.

And the main objective here is to stabilize the volumes in China. The second priority is to improve execution.

And the third priority is value creation. So on the #1, the #1 is consistent to the business strategy that YJ was describing.

And the main objective of the business is to grow volumes here, right? And in order to do that, we really need to stabilize volumes in China.

And the finance role to do that is increasing investments and making the investments more effective. I think it's important here, when we manage to stabilize volumes in China, given our footprint in India and in Southeast Asia, will be able to reignite growth for the whole Budweiser APAC.

Number two priority is execution. I think here, finance has an important role, collaborating with our commercial team in China to enable and upgrade our route-to-market model to help on this transition to more volume in the in-home channel.

That's another important priority for us. And the third one is value creation.

Here, we are reviewing internal investment decisions, improving efficiencies, cost controls. One example here, for example, we are reviewing the unit economics of different packs to make decisions that can help us be more efficient with resource allocation.

But ultimately, Liu we are here for growth, and that's our main priority for this year. Thank you very much for the question.

Thank you management for taking my questions. Thank you, YJ, and also welcome Novick.

I have 2 questions. My first question is on China in-home development.

Do you have any update or progress to share on the development of off-trade channel in China. I will translate myself.

[Foreign Language] I will ask my second question later. [Foreign Language]

Thank you, Elsie. This is YJ.

Let me take this question. As a channel shift to in-home channel, we are taking actions to expand in the in-home channel to adapt.

As we have a relative low exposure in in-home channel, which means we have a massive growth potential. We are investing to catch up.

[Foreign Language]

My second question is on China commercial investment. So previously, management mentioned that you will increase marketing this year.

Is that plan still on track? And what's the marketing plan for the coming peak season and sport events like World Cup?

[Foreign Language]

Yes. So as Novick mentioned, as I mentioned earlier, in 2026, our top priority in China is a stabilized volume.

To achieve this, we have given room to the team, to the commercial team to increase commercial investment. So that's the direction we set up for the commercial team.

[Foreign Language]

My first question is on China. Could we have some more updates on the growth of your emerging channels such as O2O instant retail and e-commerce in China.

More importantly, how do margins and pricing dynamics across these channels compared with traditional off-trade and how are we managing potential channel conflict with our distributors? But let me translate first.

[Foreign Language]

Thank you for your question. I will take this question as well.

O2O is one of faster emerging channel in China. We have started to make a fair significant effort to increase our presence with it.

And we see this as a great opportunity for us in 2026 and beyond. We partnered with a major O2O platform to further expand our participation.

[Foreign Language]

And my second question is on Korea. Excluding shipment phasing effects, are we still seeing underlying share gains in South Korea?

What are the key challenges to sustaining outperformance in the market? [Foreign Language]

Thank you. Let me take this question again.

Total industry in Korea have remained soft in the first quarter 2026. With a soft consumer environment continued to impact overall alcohol consumption.

However, our underlying momentum in Korea continued and we outperformed the industry in both the on-premise and in-home channel. [Foreign Language]

I have 2 questions here. First is on the cost of goods sold in general.

We saw some raw materials price volatility, and this has been coming up recently for example, like aluminum. So what will be our view on the raw material costs for year 2027?

[Foreign Language]

In 2026 of first quarter our cost per hectoliter has decreased by 0.8%, mainly driven by efficiency improvement, partially offset by commodity headwind. [Foreign Language]

[Foreign Language]. So my second question is on the India side.

So could you share with us now on the Indian market update? How do we see the market competition and our strategy over there?

I understand that we are focusing on more market share. So may I know when the company will start focusing on the profitability of the market?

Is it still a little bit too early? And that competition is still very keen?

Should -- I mean should Carlsberg be listed? What is your view on the competitive environment afterwards?

[Foreign Language]

Thank you. In India, we are focused on sustainable and meaningful top line growth that can translate to EBITDA and cash flow growth accordingly.

[Foreign Language]

And thank you, YJ and Bernardo for the detailed answer previously. Congrats to Bernardo for your new role.

I have two questions. The first one is on China pricing because YJ just mentioned that the raw materials are fully hedged and were relatively stable.

But on the pricing side, any price action and mix shift that you observed that could improve the overall pricing in the market in general? [Foreign Language]

I can take this question YJ.

Go ahead.

Lilian, nice to hear from you. Thank you for the question.

I think all the answers should start with the same reminder that our main priority, right, is growth and particularly to stabilize the volumes in China. It's true that in the first quarter, our net revenue per hectoliter was below last year and this was impacted by investments, mainly in 3 objectives for the investments to support our wholesalers, to activate our brands and also to accelerate the growth in O2O.

But on the other hand, we had positive mix effects coming from our brands, mainly driven by our Premium and Super Premium brands. I think it's important to mention to you and the press that we expect to continue to invest in 2026.

Regarding price, we will continue to monitor always the prices in the market, and we are open to adjustments if something changes. But at this moment, we don't have any news regarding price increase for China.

My second question is on Korea -- South Korea market. We all know that last year, April, you had a price increase, which still benefited the first Q this year on the pricing side.

But what will drive the South Korea revenue and also pricing and the EBITDA growth for the rest of the year, in particular, the industry remain a little bit soft and the competition is still there. So this is the question on Korea.

[Foreign Language]

I can take this one too. Very good question, Lillian, thanks.

When we think about like a medium-term margin growth for APAC East and Korea, I think there are mainly 3 things that can drive this. One is, of course, pricing.

The second one, operational efficiencies. And the third one, I think it's important to mention is mix and innovations.

Maybe let me talk about each one of them. On prices, of course, we always consider our pricing decisions looking at what's happening in the beer market, but also the macroeconomic situation in the country.

We'll continue to monitor similar to China. We don't have anything to announce at this point.

On the second part, operational efficiencies. Here, we continue to implement cost management initiatives.

This is one of our main strengths at Budweiser APAC, as YJ was talking about our efficiency and excellence programs that we have so this is something that we still see opportunities. And number three, I think mix and premiumization and innovations are very important for us in the future.

Maybe I can share a couple of examples one of them is the growth of Stella Artois in the on-trade. I think that's a prudent healthy growth.

The other one is the nonalcoholic beer, like example like Cass 0.0. I think both of them are good examples of innovations that can both drive volume growth, but also margin expansion.

So overall, I think that we see opportunities to keep recovering margins in Korea in the future. Thank you for the question.

My first one is regarding for the dividend. And given that Bernardo has really taken up the CFO role.

So I just want to know that whether from the group perspective, whether you will change the capital allocation approach. Especially the last 2 years, right, we -- they paid out USD 0.0566 per share dividend to the shareholders.

So whether this is the dividend per share policy under review. So this is my first question.

[Foreign Language]

Thank you, Linda. Nice to hear from you.

Thanks for the question. So I think it's important to remind everybody, right, we are working to deliver sustainable long-term results for our shareholders, right?

And the other message is that our capital allocation strategy remains the same. Our first priority continues to be to invest in our business like we are doing this year to drive organic growth.

followed by M&A when we see opportunities for acquisitions. That's the second one.

And then the third one to return to our shareholders, for example, via dividend, but it's also what we have been doing, right? So I think we are very proud of our dividend track record since the beginning, recently with the announcement of the $750 million dividend that we announced for 2025, which by the way, was consistent to the dividend for the previous 2024.

So I think if I have to summarize, we are working towards improving our business performance this year to be able to keep this consistency in the future. Thanks for the question.

My second question is regarding for our products, and I think this may be YJ can help. So when we compare China to the other Western countries.

I think there's always plenty of alcohol product innovation. So I just want to know that, again, whether the management can elaborate more about our product innovation plans?

And then what kind of the innovation strategy will fit well for our China market. [Foreign Language]

[Foreign Language]

Thank you. As I mentioned on our 2025 annual results call early this year, our priority is to stabilize volume and rebuild our market share momentum in China by investing in our in-home route to market and a leading permium portfolio.

The progress we have been seeing in the first quarter and have been encouraging. On this positive note, thank you all for joining us today, and I'm looking forward to speaking to you soon.