Total Volume Decrease: 8.8% decrease for the full year 2024. Revenue Decrease: 7% decrease for the full year 2024. Revenue per Hectoliter Growth: 2% increase for the full year 2024. Normalized EBITDA Decrease: 6.3% decrease for the full year 2024. Normalized EBITDA Margin Increase: 21 basis points increase for the full year 2024. Cost of Sales Increase: 0.7% increase on a per hectoliter basis. APAC West Volume Decrease: 10.6% decrease for the full year 2024. APAC West Revenue Decrease: 11.4% decrease for the full year 2024. APAC West Revenue per Hectoliter Decrease: 0.9% decrease for the full year 2024. APAC West Normalized EBITDA Decrease: 14% decrease for the full year 2024. China Volume Decrease: 11.8% decrease for the full year 2024. China Revenue Decrease: 13% decrease for the full year 2024. China Revenue per Hectoliter Decrease: 1.4% decrease for the full year 2024. APAC East Volume Increase: 3.6% increase for the full year 2024. APAC East Revenue Increase: 12.7% increase for the full year 2024. APAC East Revenue per Hectoliter Increase: 8.7% increase for the full year 2024. APAC East Normalized EBITDA Increase: 33.2% increase for the full year 2024. APAC East EBITDA Margin Increase: 472 basis points increase for the full year 2024. Net Cash Position: USD 2.9 billion at the end of 2024. Dividend Recommendation: USD 750 million or $0.0566 per share, a 7% increase from the prior year.

Warning! GuruFocus has detected 4 Warning Signs with BDWBF.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Budweiser Brewing Co APAC Ltd (BDWBF) expanded its distribution of the Budweiser brand from 220 to 235 cities in 2024, with plans to reach 250 cities in 2025. The company achieved strong growth in South Korea, with market share reaching its highest level in over a decade, driven by brands like Cass, HANMAC, and Stella Artois. In India, the Premium and Super Premium portfolio grew by almost 20% in both the fourth quarter and the full year, with Budweiser's market share more than doubling over the past five years. Budweiser Brewing Co APAC Ltd (BDWBF) made significant progress in sustainability, doubling the number of carbon-neutral breweries in China and reducing water usage by 37% compared to 2017. The company announced a 7% increase in dividends for the full year 2024, reflecting confidence in future cash flow generation capabilities.

Negative Points

Total volumes for Budweiser Brewing Co APAC Ltd (BDWBF) decreased by 8.8% in 2024, with revenue declining by 7%. The Chinese market faced challenges with a weak consumer environment and negative channel mix, leading to an 11.8% decrease in volumes. In APAC West, volumes decreased by 10.6%, with a 14% decline in normalized EBITDA. The company experienced a 20.1% revenue decline in China during the fourth quarter, with a significant impact from proactive inventory management. Despite growth in certain regions, the overall cost of sales increased by 0.7% per hectoliter, driven by operational deleverage and product mix.

Story Continues

Q & A Highlights

Q: Can you provide an update on the recent sales performance in China, particularly around the Chinese New Year, and any pricing updates for your non-premium portfolio? A: The consumer environment in China remains soft, impacting the beer market and our performance. We have seen a challenging environment with lower consumer confidence, particularly affecting the on-premise channels. However, early readings from the Chinese New Year indicate similar shipment trends as last year but improved consumer sales. We have maintained inventory discipline and took a slight price increase in Q4 2024, with core pricing usually reviewed before summer.

Q: What is Budweiser APAC's strategic focus in China for 2025 following recent management changes? A: Our top priority in China for 2025 is market share growth. We aim to lead the premiumization of the beer category by focusing on consistent strategy execution, adapting to current consumption trends, and prioritizing Budweiser and Core++ segments. We are shifting resources from Super Premium to Core++ and accelerating in-home premiumization.

Q: How does Budweiser APAC plan to balance market share recovery with profitability in China, given the macro uncertainties? A: Market share growth is our top priority in China for 2025. While margin remains important for long-term success, we are focusing on top-line growth. We plan to increase sales and marketing investments without necessarily diluting EBITDA margins, supported by operational efficiencies, cost management, and brand mix.

Q: Can you elaborate on the role of Core++ in Budweiser APAC's strategy and its impact on Budweiser brand growth? A: Core++ has always been integral to our strategy, supporting expansion and channel penetration. It offers an upgrade from core and value propositions and prepares consumers for further premiumization. Core++ margins are higher than core segments but lower than Premium. We see minimal trade-down from Budweiser, making Core++ margin accretive in the current environment.

Q: What are the long-term growth pillars for Budweiser APAC in China, especially regarding geographic expansion and city maturity? A: Geographic expansion remains a key pillar, with a focus on premiumization and digitization. We prioritize expansion based on disposable income and market share position, tailoring strategies city by city. Budweiser's distribution target is to grow from 235 to 250 cities, with significant runway for further expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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