BNPP Exane view
As we have become accustomed to in recent history, it was a confident call from ABInBev. The company commented on technical / phasing headwinds in Q1, but this was expected and previously flagged by Staples peers. Beyond this, we noted comment on the US portfolio now reaching an inflection point and Chinese New Year being very good (with sales-to-retailers similar to 2024 but sales-to-consumers better). We expect the shares to hold their c.+8% gain today.
Highlights: QandA
. FCF step-up: the objective of the capital allocation is value creation and there is no change in policy. Have been articulating that the main priority is organic growth and based on the scale of the business the compounding effect of this growth is a massive value creation driver.
. China: the last 2 years have seen a very soft consumer environment and geographically the Eastern part has seen more difficulties. The business has much more potential than what has been delivered for past 2 years. Saw huge execution during CNY and have been introducing innovation in the market. Want to improve execution.
. US margins: important thing is that ABI is gaining momentum, and the portfolio is gaining share and accelerating with #1 and #2 share gaining brands. The main priority is to invest to ensure the portfolio continues to accelerate.
. Q1 factors: 2024 was a leap year so there is 1 fewer selling day (c.-1% impact); the Easter inventory build will shift from March to April this year; in the US there is some contingency stock build in Q124; China faces the toughest comp. of the year in Q1.
. Marketing and selling: ABI looks at ratios (MandS expense to sales) but is not guided by them. Important to highlight the portfolio focus on the megabrands. Have massively elevated game on data so can target better and be agile with the resources. During SuperBowl week ABI''s share in the US accelerated in both the off and on premise.
. COGS outlook: 2025 is looking like a normal year...
