Exhibit 99.2

 

 

 

Annual Report 2022

Management report

 

 

Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexico (MEXBOL: ANB) and South Africa (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock Exchange (NYSE: BUD). As a company, we dream big to create a future with more cheers. We are always looking to serve up new ways to meet life’s moments, move our industry forward and make a meaningful impact in the world. We are committed to building great brands that stand the test of time and to brewing the best beers using the finest natural ingredients. Our diverse portfolio of well over 500 beer brands includes global brands Budweiser^®, Corona^® and Stella Artois^®; multi-country brands Beck’s^®, Hoegaarden^®, Leffe^® and Michelob Ultra^®; and local champions such as Aguila^®, Antarctica^®, Bud Light^®, Brahma^®, Cass^®, Castle^®, Castle Lite^®, Cristal^®, Harbin^®, Jupiler^®, Modelo Especial^®, Quilmes^®, Victoria^®, Sedrin^® and Skol^®. Our brewing heritage dates back more than 600 years, spanning continents and generations. From our European roots at the Den Hoorn brewery in Leuven, Belgium. To the pioneering spirit of the Anheuser & Co brewery in St. Louis, US. To the creation of the Castle Brewery in South Africa during the Johannesburg gold rush. To Bohemia, the first brewery in Brazil. Geographically diversified with a balanced exposure to developed and developing markets, we leverage the collective strengths of approximately 167 000 employees based in nearly 50 countries worldwide. For 2022, our reported revenue was 57.8 billion US dollar (excluding joint ventures and associates).

The following management report should be read in conjunction with our audited consolidated financial statements.

In the rest of this document we refer to Anheuser-Busch InBev as “AB InBev”, “the company”, “we”, “us” or “our”.

Recent events

On 11 March 2022, the company announced that it is forfeiting all financial benefits from the operations of AB InBev Efes, an associate which does business in Russia and Ukraine, in which it holds a 50% non-controlling stake and which the company does not consolidate. On 22 April 2022, the company announced its decision to sell its non-controlling interest in AB InBev Efes and is in active discussions with its partner, Turkish Brewer Anadolu Efes, to acquire this interest. AB InBev’s request regarding the suspension of the license for production and sale of Bud in Russia will also be part of a potential transaction. During the year ended 31 December 2022, the company derecognized the investment in AB InBev Efes and reported a 1 143m US dollar non-cash impairment charge in non-underlying share of results of associates. (Refer to Section Risks and uncertainties, Note 4 Use of estimates and judgements, Note 8 Non-underlying items, Note 16 Investments in associates and Note 31 Related Parties).

Selected financial figures

To facilitate the understanding of our underlying performance, the comments in this management report, unless otherwise indicated, are based on organic and normalized numbers. “Organic” means the financials are analyzed eliminating the impact of changes in currencies on translation of foreign operations, and scopes. Scopes represent the impact of acquisitions and divestitures, the start-up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year-over-year changes in accounting estimates and other assumptions that management does not consider part of the underlying performance of the business.

The tables in this management report provide the segment information per region for the period ended 31 December 2022 and 2021 in the format up to Normalized EBIT level that is used by management to monitor performance.

Whenever used in this report, the term “normalized” refers to performance measures (EBITDA, EBIT, Profit, EPS, effective tax rate) before non-underlying items. Non-underlying items are either income or expenses that do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the company due to their size or nature. Normalized measures are additional measures used by management and should not replace the measures determined in accordance with IFRS as an indicator of the company’s performance, but rather should be used in conjunction with the most directly comparable IFRS measures.

 

2

The tables below set out the components of our operating income and operating expenses, as well as the key cash flow figures.

 

For the year ended 31 December   Million US dollar		2022				%				2021				%
Revenue1			57 786				100%				54 304				100%
Cost of sales			(26 305)				46%				(23 097)				43%
Gross profit			31 481				54%				31 207				57%
SG&A			(17 555)				30%				(17 574)				32%
Other operating income/(expenses)			841				1%				805				1%
Normalized profit from operations (Normalized EBIT)			14 768				26%				14 438				27%
Non-underlying items			(251)				0%				(614)				1%
Profit from operations (EBIT)			14 517				25%				13 824				25%
Depreciation, amortization and impairment			5 074				9%				4 771				9%
Non-underlying impairment			3				0%				281				1%
Normalized EBITDA			19 843				34%				19 209				35%
EBITDA			19 594				34%				18 876				35%
Normalized profit attributable to equity holders of AB InBev			6 454				11%				5 723				11%
Profit attributable to equity holders of AB InBev			5 969				10%				4 670				9%

 

For the year ended 31 December   Million US dollar		2022				2021
Operating activities
Profit			7 597				6 114
Interest, taxes and non-cash items included in profit			12 344				12 693
Cash flow from operating activities before changes in working capital and use of provisions			19 941				18 806
Change in working capital			(346)				2 459
Pension contributions and use of provisions			(351)				(375)
Interest and taxes (paid)/received			(6 104)				(6 197)
Dividends received			158				106
Cash flow from operating activities			13 298				14 799
Investing activities
Net capex			(4 838)				(5 498)
Acquisition and sale of subsidiaries, net of cash acquired/disposed of			(70)				(444)
Net proceeds from sale/(acquisition) of other assets			288				65
Cash flow from / (used in) investing activities			(4 620)				(5 878)
Financing activities
Dividends paid			(2 442)				(2 364)
Net (payments on)/proceeds from borrowings			(7 174)				(8 511)
Payment of lease liabilities			(610)				(531)
Sale/(purchase) of non-controlling interests and other			(394)				(192)
Cash flow from / (used in) financing activities			(10 620)				(11 598)
Net increase/(decrease) in cash and cash equivalents			(1 942)				(2 677)

 

 

¹ Turnover less excise taxes. In many jurisdictions, excise taxes make up a large proportion of the cost of beer charged to the company’s customers.

 

3

Financial performance

We are presenting our results under five regions: North America, Middle Americas, South America, EMEA and Asia Pacific.

The tables in this management report provide the segment information per region for the period ended 31 December 2022 and 2021 in the format down to Normalized EBIT level that is used by management to monitor performance.

The tables below provide a summary of our performance for the period ended 31 December 2022 and 2021 (in million US dollar, except volumes in thousand hectoliters) and the related comments are based on organic numbers.

 

AB INBEV WORLDWIDE		2021				Scope				Currency     translation				Organic growth				2022				Organic     growth %
Total volumes (thousand hls)			581 678				-				-				13 455				595 133				2.3%
Revenue			54 304				(395)				(2 136)				6 013				57 786				11.2%
Cost of sales			(23 097)				16				1 006				(4 230)				(26 305)				(18.4)%
Gross profit			31 207				(378)				(1 130)				1 782				31 481				5.8%
SG&A			(17 574)				365				735				(1 080)				(17 555)				(6.3)%
Other operating income/(expenses)			805				(12)				(15)				63				841				10.3%
Normalized EBIT			14 438				(26)				(410)				765				14 768				5.4%
Normalized EBITDA			19 209				(54)				(669)				1 357				19 843				7.2%
Normalized EBITDA margin			35.4%				-				-				-				34.3%				(126) bps

In 2022, our normalized EBITDA increased 7.2%, while our normalized EBITDA margin contracted 126 bps, reaching 34.3%.

Consolidated volumes grew by 2.3%, with own beer volumes up 1.8% and non-beer volumes up 5.2%, driven by the investment in our marketing capabilities and consistent execution of our five proven and scalable category expansion levers.

Consolidated revenue grew by 11.2% to 57 786m US dollar, with revenue per hectoliter growth of 8.6% driven by revenue management initiatives and continued premiumization. Combined revenues of our global brands, Budweiser, Stella Artois and Corona increased by 8.2% globally and 8.9% outside of their respective home markets.

Consolidated cost of sales increased 18.4%, and increased 15.8% on a per hectoliter basis, driven by anticipated transactional foreign currency effects and commodity cost headwinds.

Consolidated selling, general and administrative expenses (SG&A) increased 6.3% primarily due to elevated costs of distribution.

Consolidated other operating income/(expenses) in 2022 increased by 10.3% primarily driven by sale of non-core assets and one-time gains. In 2022, Ambev recognized 201m US dollar income in Other operating income related to tax credits in Brazil (2021: 226m US dollar). The net impact is presented as a scope change and does not impact the presented organic growth. Additionally, Ambev recognized 168m US dollar of interest income in Finance income in 2022 (2021: 118m US dollar) related to these credits. Underlying profit attributable to equity holders and underlying EPS were positively impacted by 186m US dollar after tax and non-controlling interest (2021: 165m US dollar). Ambev’s tax credits and interest receivables are expected to be collected over a period exceeding 12 months after the reporting date. As of 31 December 2022, the total amount of such credits and interest receivables represented 1 149m US dollar.

 

4

VOLUMES

The table below summarizes the volume evolution per region and the related comments are based on organic numbers. Volumes include not only brands that we own or license, but also third-party brands that we brew as a subcontractor and third-party products that we sell through our distribution network, particularly in Europe. Volumes sold by the Global Export business, which includes our global headquarters and the export businesses which have not been allocated to our regions, are shown separately.

 

Thousand hectoliters		2021				Scope				Organic growth				2022				Organic growth %
North America			106 965				2				(4 293)				102 674				(4.0)%
Middle Americas			141 447				105				6 072				147 624				4.3%
South America			156 622				421				7 276				164 319				4.6%
EMEA			86 707				76				3 997				90 780				4.6%
Asia Pacific			88 379				4				515				88 898				0.6%
Global Export and Holding Companies			1 558				(607)				(112)				838				(11.8)%
AB InBev Worldwide			581 678				-				13 455				595 133				2.3%

North America total volumes decreased by 4.0%

In the United States, our sales-to-wholesalers (“STWs”) declined by 4.2% and our sales-to-retailers (“STRs”) declined by 4.1%, estimated to be below the industry. In 2022, our above core beer portfolio outperformed the industry, led by Michelob ULTRA which grew volumes by high-single digits and by the growth of our premium brands including Stella Artois, Kona Big Wave and Estrella Jalisco. In Beyond Beer, our spirits-based ready-to-drink portfolio grew volume by strong double-digits and continued to outperform the industry, led by Cutwater, the #1 spirits-based cocktail in the country, and NÜTRL, the industry’s #2 vodka seltzer.

In Canada, while total volumes declined low-single digits due to a soft industry, we gained share of beer for the third year in a row.

Middle Americas total volumes increased by 4.3%.

In Mexico, we delivered volume growth across all segments of our portfolio, with our above core beer brands growing over 20%, led by Modelo, Pacifico and Michelob ULTRA. In the fourth quarter of 2022, we completed the final wave of our Oxxo channel expansion with our portfolio now available in approximately 20 000 Oxxo stores nationwide. We continued to progress our digital transformation with over 60% of our BEES customers now also BEES Marketplace buyers and our digital DTC platform, TaDa, now fulfilling over 300 000 orders per month.

In Colombia, led by the consistent implementation of our category expansion levers, the beer category continues to grow, gaining 80bps share of total alcohol volume this year and with 2022 marking the highest beer per capita consumption in over 25 years. Our volumes grew by high-single digits in 2022 compared to 2021, delivering volume growth across all segments of our portfolio. Our premium and super premium brands led the way, delivering over 25% volume growth and reaching an all-time high volume and share of our total revenue. More than 45% of our BEES customers are now also BEES Marketplace buyers.

In Peru, our volumes grew by high-single digits in 2022 reaching a new all-time high for the fiscal year, with the beer and Beyond Beer categories increasing share of total alcohol. In December, the industry momentum was impacted by social unrest in certain regions and our volumes declined by low-single digits in the fourth quarter of 2022. Over 55% of BEES customers are now also BEES Marketplace buyers.

In Ecuador, we delivered high-single digits volume growth, driven by the expansion of the beer category and supported by post COVID-19 recovery. Approximately 75% of BEES customers are now also BEES Marketplace buyers.

South America total volumes increased by 4.6%.

In Brazil, our total volume grew by 5.6% in 2022, with beer volumes up by 3.5%, outperforming the industry according to our estimates, and non-beer volumes up by 12.0% compared to 2021. In 2022, we once again delivered record high beer volumes driven by continued expansion of our market share. BEES continued to expand, delivering an all-time high Net Promoter Score (NPS) in the fourth quarter of 2022 and more than 70% of our BEES customers are now also BEES Marketplace buyers. Our digital DTC platform, Zé Delivery, fulfilled over 62 million orders this year and has now reached 4.8 million monthly active users, a 17% increase versus December 2021.

In Argentina, volumes grew by low-single digits led by the strong performance of our above core beer and non-beer brands.

EMEA total volumes increased by 4.6%.

 

5

In Europe, our volumes grew by low-single digits in 2022 compared to 2021. We continued to premiumize our portfolio in Europe this year with our premium and above premium brands now making up over 55% of our revenue. Fueled by the consistent execution of our strategy and increasing portfolio Brand Power, we expanded or maintained market share in more than 80% of our key markets in 2022. Our DTC product, PerfectDraft, expanded its shopper base to over 320 000 households and has more machines in homes than there are pubs and bars in the UK and France.

In South Africa, we reported a high-single digit increase in volumes in 2022 compared to 2021. The momentum of our business continued in 2022, delivering all-time high total volumes with beer market share ahead of pre-pandemic levels in 2019, according to our estimates. Through focused commercial investment and the consistent execution of our strategy, we increased the overall Brand Power of both our beer and Beyond Beer portfolios. Our leading core brand, Carling Black Label, grew by mid-teens and our premium, super premium and Beyond Beer portfolios all delivered a double-digit increase in volume. Over 60% of BEES customers are now also BEES Marketplace users.

In Africa excluding South Africa, volumes declined in Nigeria due to ongoing supply chain constraints and a soft industry. BEES is now available in Tanzania and Uganda.

Asia Pacific total volumes increased by 0.6%.

In China, the industry was impacted by COVID-19 restrictions throughout the year. Volumes declined by 3.0% in 2022 compared to 2021. Despite the significant impact of these restrictions, in 2022 our premium and super premium portfolio delivered volume growth ahead of pre-pandemic levels in 2019. We continued to progress our expansion strategy, with Budweiser reaching all-time high Brand Power this year. Budweiser and our super premium portfolio grew volumes by double-digits in more than half of the expansion cities despite the impact of restrictions. The roll out and adoption of the BEES platform has accelerated with over 40% of our revenue through digital channels in December.

In South Korea, in 2022, we reported a volume growth of high-single digits driven by the strong performance of our local champion, Cass. Our total market share expanded this year with gains in both the on-premise and in-home channels.

 

6

OPERATING ACTIVITIES BY REGION

The tables below provide a summary of the performance of each region, for the period ended 31 December 2022 (in million US dollar, except volumes in thousand hectoliters) and the related comments are based on organic numbers.

 

AB INBEV WORLDWIDE		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			581 678				-				-				13 455				595 133				2.3%
Revenue			54 304				(395)				(2 136)				6 013				57 786				11.2%
Cost of sales			(23 097)				16				1 006				(4 230)				(26 305)				(18.4)%
Gross profit			31 207				(378)				(1 130)				1 782				31 481				5.8%
SG&A			(17 574)				365				735				(1 080)				(17 555)				(6.3)%
Other operating income/(expenses)			805				(12)				(15)				63				841				10.3%
Normalized EBIT			14 438				(26)				(410)				765				14 768				5.4%
Normalized EBITDA			19 209				(54)				(669)				1 357				19 843				7.2%
Normalized EBITDA margin			35.4%				-				-				-				34.3%				(126) bps
North America		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			106 965				2				-				(4 293)				102 674				(4.0)%
Revenue			16 257				(5)				(76)				389				16 566				2.4%
Cost of sales			(6 185)				(10)				27				(546)				(6 714)				(8.8)%
Gross profit			10 072				(14)				(49)				(157)				9 851				(1.6)%
SG&A			(4 769)				(24)				30				176				(4 587)				3.7%
Other operating income/(expenses)			46				15				-				(16)				45				(26.1)%
Normalized EBIT			5 349				(23)				(19)				3				5 309				0.1%
Normalized EBITDA			6 131				(21)				(24)				(29)				6 057				(0.5)%
Normalized EBITDA margin			37.7%				-				-				-				36.6%				(106) bps
Middle Americas		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			141 447				105				-				6 072				147 624				4.3%
Revenue			12 541				(53)				(199)				1 892				14 180				15.1%
Cost of sales			(4 428)				23				78				(1 213)				(5 540)				(27.5)%
Gross profit			8 113				(31)				(122)				679				8 639				8.4%
SG&A			(3 149)				23				42				(305)				(3 390)				(9.8)%
Other operating income/(expenses)			24				-				-				(36)				(12)				-
Normalized EBIT			4 988				(8)				(80)				337				5 238				6.8%
Normalized EBITDA			6 126				(7)				(87)				532				6 564				8.7%
Normalized EBITDA margin			48.8%				-				-				-				46.3%				(274) bps
South America		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			156 622				421				-				7 276				164 319				4.6%
Revenue			9 494				134				(674)				2 645				11 599				27.9%
Cost of sales			(4 763)				(36)				298				(1 475)				(5 976)				(31.1)%
Gross profit			4 730				98				(376)				1 170				5 623				24.7%
SG&A			(2 762)				(143)				184				(738)				(3 458)				(25.7)%
Other operating income/(expenses)			397				(30)				9				97				473				52.4%
Normalized EBIT			2 365				(75)				(183)				530				2 638				25.7%
Normalized EBITDA			3 125				(74)				(265)				724				3 511				25.7%
Normalized EBITDA margin			32.9%				-				-				-				30.3%				(49) bps
EMEA		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			86 707				76				-				3 997				90 780				4.6%
Revenue			8 032				(148)				(798)				1 034				8 120				13.1%
Cost of sales			(3 793)				(11)				417				(780)				(4 167)				(20.5)%
Gross profit			4 239				(159)				(381)				254				3 953				6.2%
SG&A			(2 855)				135				277				(161)				(2 604)				(6.0)%
Other operating income/(expenses)			200				2				(21)				17				198				8.2%
Normalized EBIT			1 584				(22)				(125)				109				1 546				6.9%
Normalized EBITDA			2 598				(54)				(229)				296				2 612				11.5%
Normalized EBITDA margin			32.4%				-				-				-				32.2%				(45) bps

 

7

Asia Pacific		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			88 379				4				-				515				88 898				0.6%
Revenue			6 848				(132)				(343)				159				6 532				2.4%
Cost of sales			(3 048)				(1)				157				(275)				(3 168)				(9.0)%
Gross profit			3 800				(134)				(186)				(116)				3 364				(3.2)%
SG&A			(2 330)				128				115				20				(2 067)				0.9%
Other operating income/(expenses)			139				-				(4)				2				137				1.3%
Normalized EBIT			1 609				(5)				(76)				(94)				1 433				(5.9)%
Normalized EBITDA			2 321				(5)				(105)				(106)				2 104				(4.6)%
Normalized EBITDA margin			33.9%				-				-				-				32.2%				(234) bps
Global Export and Holding Companies		2021				Scope				Currency translation				Organic growth				2022				Organic growth %
Total volumes (thousand hls)			1 558				(607)				-				(112)				838				(11.8)%
Revenue			1 133				(190)				(45)				(107)				790				(11.4)%
Cost of sales			(880)				52				29				60				(740)				7.3%
Gross profit			252				(139)				(16)				(47)				50				(40.9)%
SG&A			(1 709)				246				88				(72)				(1 447)				(4.8)%
Other operating income/(expenses)			-				1				1				(1)				1				-
Normalized EBIT			(1 457)				108				73				(120)				(1 396)				(8.6)%
Normalized EBITDA			(1 093)				108				41				(60)				(1 004)				(5.9)%

REVENUE

Our consolidated revenue grew by 11.2% to 57 786m US dollar with revenue per hectoliter growth of 8.6% in 2022 driven by revenue management initiatives and continued premiumization.

COST OF SALES

Our cost of sales increased by 18.4% and increased by 15.8% on a per hectoliter basis, driven by anticipated transactional foreign currency effects and commodity headwinds.

OPERATING EXPENSES

Our total operating expenses increased 6.1% in 2022:

 

·

Selling, General & Administrative Expenses (SG&A) increased by 6.3% due primarily to elevated costs of distribution.

 

·

Other operating income increased 10.3% primarily driven by the sale of non-core assets and one-time gains. In addition, in 2022, Ambev, our subsidiary, recognized 201m US dollar income in Other operating income related to tax credits in Brazil (2021: 226m US dollar). The net impact is presented as a scope change.

NORMALIZED PROFIT FROM OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION (NORMALIZED EBITDA)

Our normalized EBITDA increased 7.2% organically to 19 843m US dollar, with an EBITDA margin of 34.3%, representing an EBITDA margin organic contraction of 126 bps, as our top-line growth was partially offset by anticipated transactional foreign currency effects and commodity headwinds and higher SG&A.

Differences in normalized EBITDA margins by region are due to a number of factors such as different routes to market, share of returnable packaging in the region’s sales and premium product mix.

RECONCILIATION BETWEEN NORMALIZED EBITDA AND PROFIT ATTRIBUTABLE TO EQUITY HOLDERS

Normalized EBITDA and EBIT are measures utilized by us to demonstrate the company’s underlying performance.

Normalized EBITDA is calculated excluding the following effects from profit attributable to our equity holders: (i) Non-controlling interest, (ii) Income tax expense, (iii) Share of results of associates, (iv) Non-underlying share of results of associates, (v) Net finance cost, (vi) Non-underlying net finance cost, (vii) Non-underlying items above EBIT (including non-underlying impairment) and (viii) Depreciation, amortization and impairment.

 

8

Normalized EBITDA and EBIT are not accounting measures under IFRS accounting and should not be considered as an alternative to Profit attributable to equity holders as a measure of operational performance or as an alternative to cash flow as a measure of liquidity. Normalized EBITDA and EBIT do not have a standard calculation method and our definition of normalized EBITDA and EBIT may not be comparable to that of other companies.

 

For the year ended 31 December   Million US dollar		Notes		2022				2021
Profit attributable to equity holders of AB InBev					5 969				4 670
Non-controlling interest					1 628				1 444
Profit of the period					7 597				6 114
Income tax expense		12			1 928				2 350
Share of result of associates		16			(299)				(248)
Non-underlying share of results of associates		8 / 16			1 143				-
Non-underlying net finance cost/(income)		11			(498)				806
Net finance cost		11			4 646				4 803
Non-underlying items above EBIT (including non-underlying impairment)		8			251				614
Normalized EBIT					14 768				14 438
Depreciation, amortization and impairment (excluding non-underlying impairment)		10			5 074				4 771
Normalized EBITDA					19 843				19 209

Non-underlying items are either income or expenses that do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the company due to their size or nature. Details on the nature of the non-underlying items are disclosed in Note 8 Non-underlying items.

 

9

IMPACT OF FOREIGN CURRENCIES

Foreign currency exchange rates have a significant impact on our financial statements. The following table sets forth the percentage of our revenue realized by currency for the 2022 and 2021:

 

		2022								2021
US dollar			28.8%								29.6%
Brazilian real			14.5%								12.4%
Mexican peso			10.7%								9.4%
Chinese yuan			8.3%								9.7%
Euro			5.4%								6.2%
Colombian peso			4.2%								4.1%
South African rand			4.0%								4.0%
Canadian dollar			3.4%								3.7%
Argentinean peso1			3.3%								3.0%
Peruvian nuevo sol			2.9%								2.6%
Pound sterling			2.1%								2.7%
Dominican peso			2.1%								2.1%
South Korean won			2.0%								2.1%
Other			8.2%								8.1%

The following table sets forth the percentage of our normalized EBITDA realized by currency for the 2022 and 2021:

 

		2022								2021
US dollar			31.0%								32.8%
Mexican peso			14.9%								13.6%
Brazilian real			11.3%								9.8%
Chinese yuan			7.9%								9.4%
Colombian peso			5.2%								5.4%
Euro			4.6%								4.3%
Peruvian nuevo sol			4.2%								4.0%
South African rand			4.1%								3.9%
Argentinean peso1			3.4%								2.7%
Dominican peso			2.8%								3.0%
Canadian dollar			2.4%								2.9%
South Korean won			1.8%								1.7%
Pound sterling			0.0%								0.3%
Other			6.6%								6.2%

In 2022, the fluctuation of the foreign currency rates had a negative translation impact, including hyperinflation accounting impact, of 2 136m US dollar on our revenue (2021: positive impact of 326m US dollar), of 669m US dollar on our normalized EBITDA (2021: positive impact of 96m US dollar) and of 410m US dollar on our normalized EBIT (2021: positive impact of 35m US dollar).

Our profit (after tax) was negatively affected by the fluctuation of foreign currencies, including hyperinflation accounting impact, amounting to 132m US dollar (2021: positive impact of 41m US dollar), while the negative translation impact, including hyperinflation accounting impact, on our EPS (profit attributable to our equity holders) was 121m US dollar or 0.06 US dollar per share (2021: positive impact of 38m US dollar or 0.02 US dollar per share).

The impact of the fluctuation of the foreign currencies on our net debt amounted to 1 527m US dollar (decrease of net debt) in 2022, as compared to an impact of 1 609m US dollar (decrease of net debt) in 2021. The impact of the fluctuation of the foreign currencies on the equity attributable to our equity holders amounted to 1 123m US dollar (decrease of equity), as compared to an impact of 4 320m US dollar (decrease of equity) in 2021.

 

 

¹ Hyperinflation accounting was adopted in 2018 to report the company’s Argentinian operations.

 

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PROFIT

Normalized profit attributable to our equity holders was 6 454m US dollar (normalized EPS 3.21 US dollar) in 2022, compared to 5 723m US dollar (normalized EPS 2.85 US dollar) in 2021. Underlying profit (normalized profit attributable to equity holders of AB InBev excluding mark-to-market gains or losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 6 093m US dollar in 2022 (Underlying EPS 3.03 US dollar) as compared to 5 774m US dollar in 2021 (Underlying EPS 2.88 US dollar) (see Note 21 Changes in equity and earnings per share for more details). Profit attributable to our equity holders for 2022 was 5 969m US dollar, compared to 4 670m US dollar for 2021 and includes the following impacts:

 

·

Net finance costs (excluding non-underlying net finance items): 4 646m US dollar in 2022 compared to a net finance cost of 4 803m US dollar in 2021. Mark-to-market adjustment linked to the hedging of our share-based payment programs amounted to a gain of 331m US dollar in 2022, compared to a loss of 23m US dollar in 2021 resulting in a change of 354m US dollar.

 

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Non-underlying net finance income/(cost): Non-underlying net finance income amounted to 498m US dollar in 2022 compared to 806m US dollar cost in 2021. 274m US dollar gain resulted from mark-to-market adjustments on derivative instruments entered into to hedge the shares issued in connection with the Modelo and SAB combination (2021: 25m US dollar loss), 246m US dollar gain resulted from the early termination of certain bonds (2021: 741m US dollar loss) and 22m US dollar loss related to the remeasurement of deferred considerations on prior year acquisitions (2021: 19m US dollar loss).

 

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Non-underlying share of results of associates: Non-underlying share of results of associates amounted to 1 143m US dollar in 2022 (2021: nil) and relates to the impairment of our investment in AB InBev Efes.

 

·

Non-underlying items impacting profit from operations: In 2022, we incurred 251m US dollar of non-underlying costs (2021: 614m US dollar) mainly comprising of 110m US dollar of restructuring costs (2021: 172m US dollar), 71m US dollar of business and asset disposals (including impairment losses) (2021: 247m US dollar), 18m US dollar of costs associated with COVID-19 (2021: 105m US dollar) that mainly relate to personal protection equipment for our colleagues and other costs incurred as a direct consequence of the COVID-19 pandemic and 51m US dollar of AB InBev Efes related costs mainly from the discontinuation of exports to Russia and the forfeiting of our benefits from the operations of the associate. In 2021, we incurred 72m US dollar cost related to the Zenzele Kabili scheme.

 

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Income tax expense: 1 928m US dollar in 2022 with an effective tax rate of 18.6% compared to 2 350m US dollar in 2021 with an effective tax rate of 28.6%. The 2022 effective tax rate is positively impacted by non-taxable gains from derivatives related to hedging of share-based payment programs and hedging of the shares issued in a transaction related to the combination with Grupo Modelo and SAB, while the 2021 effective tax rate was negatively impacted by non-deductible losses from these derivatives. In addition, the 2022 effective tax rate was positively impacted by higher distribution of interest on shareholders’ equity from Brazil and lower non-deductible costs. The 2022 effective tax rate includes 350m US dollar benefit from a reorganization which resulted in the utilization of current year and carry forward interests for which no deferred tax asset was recognized. The normalized effective tax rate excluding mark-to-market gains or losses linked to the hedging of our share-based payment programs was 23.8% in 2022 compared to 27.9% in 2021.

 

·

Profit attributable to non-controlling interest: 1 628m US dollar in 2022 compared to 1 444m US dollar in 2021.

 

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Liquidity position and capital resources

CASH FLOWS

 

Million US dollar		2022				2021
Cash flow from operating activities			13 298				14 799
Cash flow from investing activities			(4 620)				(5 878)
Cash flow from financing activities			(10 620)				(11 598)
Net increase/(decrease) in cash and cash equivalents			(1 942)				(2 677)

Cash flow from operating activities

 

Million US dollar		2022				2021
Profit			7 597				6 114
Interest, taxes and non-cash items included in profit			12 344				12 693
Cash flow from operating activities before changes in working capital and use of provisions			19 941				18 806
Change in working capital			(346)				2 459
Pension contributions and use of provisions			(351)				(375)
Interest and taxes (paid)/received			(6 104)				(6 197)
Dividends received			158				106
Cash flow from operating activities			13 298				14 799

Our cash flow from operating activities reached 13 298m US dollar in 2022 compared to 14 799m US dollar in 2021. The decrease was primarily driven by changes in working capital for 2022 compared to 2021 due to (i) 2021 figures that were impacted by lower capital expenditure and bonus accruals in 2020 and (ii) increased inventory balances in 2022.

Cash flow from investing activities

 

Million US dollar		2022				2021
Net capex			(4 838)				(5 498)
Sale/(acquisition) of subsidiaries, net of cash disposed/ acquired of			(70)				(444)
Proceeds from sale/(acquisition) of other assets			288				65
Cash flow from/(used in) investing activities			(4 620)				(5 878)

Our cash outflow from investing activities was 4 620m US dollar in 2022 compared to a cash outflow of 5 878m US dollar in 2021. The decrease in the cash outflow from investing activities was mainly due to lower net capital expenditures and lower outflows from acquisition of subsidiaries in 2022 compared to 2021.

Our net capital expenditures amounted to 4 838m US dollar in 2022 and 5 498m US dollar in 2021. Out of the total 2022 capital expenditures approximately 36% was used to improve the company’s production facilities while 45% was used for logistics and commercial investments and 20% was used for improving administrative capabilities and for the purchase of hardware and software.

Cash flow from financing activities

 

Million US dollar		2022				2021
Dividends paid			(2 442)				(2 364)
Net (payments on)/proceeds from borrowings			(7 174)				(8 511)
Payment of lease liabilities			(610)				(531)
Sale/(purchase) of non-controlling interests and other			(394)				(192)
Cash flow from/(used in) financing activities			(10 620)				(11 598)

Our cash outflow from financing activities amounted to 10 620m US dollar in 2022, as compared to a cash outflow of 11 598m US dollar in 2021.

In addition to a very comfortable debt maturity profile and strong cash flow generation, as of 31 December 2022, we had total liquidity of 20.0 billion US dollar, which consisted of 10.1 billion US dollar available under committed long-term credit facilities and 9.9 billion US dollar of cash, cash equivalents and short-term investments in debt securities less bank overdrafts. Although we may borrow such amounts to meet our liquidity needs, we principally rely on cash flows from operating activities to fund the company’s operations.

 

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CAPITAL RESOURCES AND EQUITY

Our objective to maximize long-term value creation is driven by our focus on three areas: disciplined resource allocation, robust risk management and an efficient capital structure. We continued to deliver strong free cash flow, generating approximately 8.5 billion US dollar. As a result, this year we have made significant further progress on our deleveraging journey. Gross debt reduced by 8.9 billion US dollar to reach 79.9 billion US dollar, resulting in net debt of 69.7 billion US dollar as of 31 December 2022 as compared to 76.2 billion US dollar as of 31 December 2021.

Net debt is defined as non-current and current interest-bearing loans and borrowings and bank overdrafts minus debt securities and cash. Net debt is a financial performance indicator that is used by our management to highlight changes in the company’s overall liquidity position. We believe that net debt is meaningful for investors as it is one of the primary measures our management uses when evaluating our progress towards deleveraging toward our optimal net debt to normalized EBITDA ratio of around 2x.

Our net debt decreased by 6.5 billion US dollar as of 31 December 2022 compared to 31 December 2021. Aside from operating results that are net of capital expenditures, the net debt is impacted mainly by the payment of interests and taxes (6.1 billion US dollar increase of net debt), dividend payments to shareholders of AB InBev and Ambev (2.4 billion US dollar increase of net debt) and foreign exchange impact on net debt (1.5 billion US dollar decrease of net debt).

Net debt to normalized EBITDA decreased from 3.96x for the 12-month period ending 31 December 2021 to 3.51x for the 12-month period ending 31 December 2022. Our optimal capital structure is a net debt to normalized EBITDA ratio of around 2x and we will continue to proactively manage our debt portfolio.

Consolidated equity attributable to our equity holders as at 31 December 2022 was 73 398m US dollar, compared to 68 669m US dollar as at 31 December 2021. The net increase in equity results from the profit attributable to equity shareholders, partially offset by net foreign exchange losses on translation of foreign operations primarily related to the combined effect of the weakening of the closing rates of the Argentina Pesos, the Chinese Yuan, the Colombian Pesos, the Euro and the South Africa Rand, which resulted in a foreign exchange translation adjustment of 1 123m US dollar as of 31 December 2022 (decrease of equity).

Further details on interest-bearing loans and borrowings, repayment schedules and liquidity risk, are disclosed in Note 22 Interest-bearing loans and borrowings and Note 27 Risks arising from financial instruments.

As of 31 December 2022, the company’s credit rating from Standard & Poor’s was BBB+ for long-term obligations and A-2 for short-term obligations, with a positive outlook, and the company’s credit rating from Moody’s Investors Service was Baa1 for long-term obligations and P-2 for short-term obligations, with a positive outlook.

Research and development

Given our focus on innovation, we place a high value on research and development (R&D). In 2022, we spent 268m US dollar in research and development (2021: 298m US dollar). The spend focused on product innovations, market research, as well as process optimization and product development.

R&D in product innovation covers liquid, packaging and draft innovation. Product innovation consists of breakthrough innovation, incremental innovation and renovation. The main goal for the innovation process is to provide consumers with better products and experiences. This implies launching new liquid, new packaging and new draught products that deliver better experience for the consumer and better performance of top-line results, by increasing our competitiveness in the relevant markets. With consumers comparing products and experiences offered across very different drink categories and the offering of beverages increasing, our research and development efforts also require an understanding of the strengths and weaknesses of other beverage categories, spotting opportunities for beer and developing consumer solutions (products) that better address consumer need and deliver better experience. This requires understanding consumer emotions and expectations. Sensory experience, premiumization, convenience, sustainability and design are all central to our R&D efforts.

R&D in process optimization is primarily aimed at quality improvement, better efficiency, capacity increase (brewery debottlenecking and addressing volume issues, while minimizing capital expenditure) and improving efficiency. Newly developed processes, materials and/or equipment are documented in best practices and shared across business regions. Current projects range from malting to bottling of finished products.

Our R&D efforts are also directed towards reduction of carbon footprint in our operations, but also of our packages. Projects range from process innovations that reduce energy in production process steps, but also focus on making packages lighter, increase the amount of recycled content, and convert to more returnable packaging.

 

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In the biotech space, our R&D teams are working on solutions to upcycle co-product streams, but also to provide protein solutions through precision fermentation.

Knowledge management and learning is also an integral part of R&D. We seek to continuously increase our knowledge through collaborations with universities, startups and suppliers. We believe strongly in open innovation as an answer to rapidly changing needs and external environment, and our innovation process is designed to create an innovation ecosystem.

Our R&D team is deeply connected with the company’s and the business regions’ priorities and approves concepts which are subsequently prioritized for development. The R&D teams invest in both short- and long-term strategic projects for future growth, with the launch time depending on complexity and prioritization. Launch time usually falls within the next calendar year, but at the same time new concepts are developed that will only be implemented within a time horizon of 2-5 years.

The Global Innovation and Technology Center (“GITeC”), located in Leuven, accommodates the Packaging, Product, Process Development teams and facilities such as Labs, Experimental Brewery and the European Central Lab, which also includes Sensory Analysis. In addition to GITeC, we also have Product, Packaging and Process development teams located in each of our geographic regions focusing on the short-term needs of such regions.

Risks and uncertainties

Under the explicit understanding that this is not an exhaustive list, AB InBev’s major risk factors and uncertainties are listed below. There may be additional risks which AB InBev is unaware of. There may also be risks AB InBev now believes to be immaterial, but which could turn out to have a material adverse effect. Moreover, if and to the extent that any of the risks described below materialize, they may occur in combination with other risks which would compound the adverse effect of such risks. The sequence in which the risk factors are presented below is not indicative of their likelihood of occurrence or of the potential magnitude of their financial consequence.

AB InBev’s business, financial condition and operating results have been and may continue to be negatively impacted by risks associated with global, regional and local economic weakness and uncertainty, including those resulting from an economic downturn, inflation, geopolitical instability (such as the ongoing conflict between Russia and Ukraine), increases in energy prices, the COVID-19 pandemic, changes in government policies and/or increased interest rates. Consumption of beer and other alcohol and non-alcohol beverages in many of the jurisdictions in which AB InBev operates is closely linked to general economic conditions and changes in disposable income. Difficult macroeconomic conditions in AB InBev’s key markets have adversely affected the demand for AB InBev’s products in the past and may in the future have a material adverse effect on the demand for AB InBev’s products, which in turn could result in lower revenue and reduced profit. The prevailing geopolitical instability and sustained inflation (including as a result of the ongoing conflict between Russia and Ukraine) have resulted in increased pressure on the supply chain and increased energy costs, which may increase AB InBev’s costs of manufacturing, selling and delivering its products. In cases of sustained and elevated inflation across several of its key markets, it may be difficult for AB InBev to effectively manage the increases to its costs and it may not able to pass these increased costs to its customers. Significant further deterioration in economic conditions may also cause AB InBev’s suppliers, distributors and other third-party partners to experience financial or operational difficulties that they cannot overcome, impairing their ability to satisfy their obligations to AB InBev, in which case AB InBev’s business and results of operations could be adversely affected.

A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on AB InBev’s ability to access capital, its business, results of operations and financial condition, and on the market price of its shares and American Depositary Shares.

The ongoing conflict between Russia and Ukraine has adversely affected, and may continue to adversely affect AB InBev’s business, financial performance and results of operations. In March 2022, AB InBev announced that it is forfeiting all financial benefits as a non-controlling partner from the operations of the AB InBev Efes joint venture. In April 2022, AB InBev announced its decision to sell its non-controlling interest in the AB InBev Efes joint venture, and that it is in active discussions with its partner, Turkish Brewer Anadolu Efes, to acquire this interest. As a result, AB InBev de-recognized the investment in AB InBev Efes and reported a 1.1 US billion non-cash impairment charge in exceptional share of results of associates as part of its first quarter results announcement. Any potential divestment of AB InBev’s non-controlling interest in the AB InBev Efes joint venture will be subject to customary closing conditions, including regulatory approvals in Russia and Ukraine, and there can be no guarantee that necessary regulatory approvals will be obtained or that AB InBev will be successful in divesting its interest. In connection with the ongoing conflict, various governmental authorities, including in the E.U. and the U.S., have imposed sanctions and other restrictive measures against Russia, including export

 

14

controls and restrictions on carrying out certain activities in Russia or in support of Russian businesses. As a result of the conflict and international reactions thereto, Russian authorities have also imposed various economic and financial restrictions, including currency controls and restrictions on transacting with non-Russian parties. The implementation or expansion of these sanctions, trade restrictions, export and currency controls and other restrictive measures may make it difficult for AB InBev to divest its non-controlling interest in the AB InBev Efes joint venture and repatriate, or otherwise remit, cash from Russia to other jurisdictions. Any failure to comply with applicable sanctions and restrictions could subject AB InBev to regulatory penalties and reputational risk. Even though AB InBev has forfeited all financial benefits from the AB InBev Efes joint venture, these developments have had, and may continue to have, an adverse impact on the company’s business, financial performance and results of operations, and could result in damage to its reputation.

Furthermore, the conflict has resulted and could continue to result in volatile energy, commodity and raw materials markets, supply chain disruptions and inflation, which has affected and may continue to affect the price and availability of certain raw materials or commodities required for AB InBev’s products and may adversely affect its operations. These and other impacts of the conflict could have the effect of heightening other risks described herein, including, but not limited to, adverse effects on economic and political conditions in AB InBev’s key markets, increased risk of cyber incidents or other disruptions to AB InBev’s information systems, reputational risks and additional trade restrictions, which could materially and adversely affect AB InBev’s business and results of operations. The ultimate impact of these disruptions depends on events beyond AB InBev’s knowledge or control, including the scope and duration of the conflict and actions taken by parties other than AB InBev to respond to them, and cannot be predicted.

AB InBev’s results of operations are affected by fluctuations in exchange rates. Any change in exchange rates between AB InBev’s operating companies’ functional currencies and the U.S. dollar will affect its consolidated income statement and statement of financial position when the results of those operating companies are translated into U.S. dollar for reporting purposes as translational exposures are not hedged. Also, there can be no assurance that the policies in place to manage commodity price and transactional foreign currency risks to protect AB InBev’s exposure will be able to successfully hedge against the effects of such foreign exchange exposure, especially over the long-term. Further, the use of financial instruments to mitigate currency risk and any other efforts taken to better match the effective currencies of AB InBev’s liabilities to its cash flows could result in increased costs.

Following the categorization of Argentina in AB InBev’s results for the third quarter of 2018 as a country with a three-year cumulative inflation rate greater than 100%, the country is considered as a hyperinflationary economy in accordance with IFRS rules (IAS 29), resulting in the restatement of certain results for hyperinflation accounting. If the economic or political situation in Argentina further deteriorates, the South America operations may be subject to additional restrictions under new Argentinean foreign exchange, export repatriation or expropriation regimes that could adversely affect AB InBev’s ability to access funds from Argentina, financial condition and operating results.

AB InBev may not be able to obtain the necessary funding for its future capital or refinancing needs and may face financial risks due to its level of debt and uncertain market conditions. AB InBev may be required to raise additional funds for its future capital needs or to refinance its current indebtedness through public or private financing, strategic relationships or other arrangements and there can be no assurance that the funding, if needed, will be available or provided on attractive terms. AB InBev has incurred substantial indebtedness by entering into a senior credit facility and accessing the bond markets from time to time based on its financial needs, including as a result of the acquisition of SAB. For the near term, the portion of AB InBev’s consolidated statement of financial position represented by debt is expected to remain higher as compared to its historical position. AB InBev’s increased level of debt could have significant consequences for AB InBev, including (i) increasing its vulnerability to general adverse economic and industry conditions, (ii) limiting its flexibility in planning for, or reacting to, changes in its business and the industry in which AB InBev operates, (iii) impairing its ability to obtain additional financing in the future and limiting its ability to fund future working capital and capital expenditures, to engage in future acquisitions or development activities or to otherwise realize the value of its assets and opportunities fully, (iv) requiring AB InBev to issue additional equity (potentially under unfavorable market conditions), and (v) placing AB InBev at a competitive disadvantage compared to its competitors that have less debt. AB InBev’s ability to repay and renegotiate its outstanding indebtedness will be dependent upon market conditions. Unfavorable conditions, including significant price volatility, dislocations and liquidity disruptions in the global credit markets in recent years, as well as downward pressure on credit capacity for certain issuers without regard to those issuers’ underlying financial strength, could increase costs beyond what is currently anticipated. Such costs could have a material adverse impact on AB InBev’s cash flows, results of operations or both. While AB InBev aims to dynamically allocate its surplus free cash flow to balance its leverage, return cash to shareholders and pursue selective mergers and acquisitions, the company’s level of debt may restrict the amount of dividends it is able to pay.

Also, a credit rating downgrade could have a material adverse effect on AB InBev’s ability to finance its ongoing operations or to refinance its existing indebtedness. In addition, a failure of AB InBev to refinance all or a substantial amount of its debt obligations when they become due, or more generally a failure to raise additional equity capital or debt financing or

 

15

to realize proceeds from asset sales when needed, would have a material adverse effect on its financial condition and results of operations.

AB InBev’s results could be negatively affected by increasing interest rates. Although AB InBev enters into interest rate swap agreements to manage its interest rate risk and also enters into cross-currency interest rate swap agreements to manage both its foreign currency risk and interest-rate risk on interest-bearing financial liabilities, there can be no assurance that such instruments will be successful in reducing the risks inherent in exposures to interest rate fluctuations.

The ability of AB InBev’s subsidiaries to distribute cash upstream may be subject to various conditions and limitations, including, but not limited to, currency controls and restrictions, accounting principles and illiquidity, inconvertibility or non-transferability of a specified currency. The inability to obtain sufficient cash flows from its domestic and foreign subsidiaries and affiliated companies could adversely impact AB InBev’s ability to pay dividends and otherwise negatively impact its business, results of operations and financial condition.

Changes in the availability or price of raw materials, commodities, energy and water, including as a result of geopolitical instability, inflationary pressures, currency fluctuations, the COVID-19 pandemic, constraints on sourcing and unexpected increases in tariffs on such raw materials and commodities, like aluminum, could have an adverse effect on AB InBev’s results of operations to the extent that AB InBev fails to adequately manage the risks inherent in such volatility, including if AB InBev’s hedging and derivative arrangements do not effectively or completely hedge against foreign currency risks and changes in commodity prices. AB InBev experienced higher commodity, raw materials and logistics costs during 2022, which may continue. Energy prices have been subject to significant price volatility in the recent past, including as a result of the ongoing conflict between Russia and Ukraine, and may be again in the future. High energy prices over an extended period of time and disruptions or constraints in the availability of transportation services may affect the price or availability of raw materials or commodities required for AB InBev’s products, and may adversely affect AB InBev’s operations. AB InBev may not be able to increase its prices to offset these increased costs or increase its prices without suffering reduced volume, revenue and operating income.

Certain of AB InBev’s operations depend on effective distribution networks to deliver its products to consumers, and distributors play an important role in distributing a significant proportion of beer and other beverages. Generally, distributors purchase AB InBev’s products from AB InBev and then sell them either to other distributors or points of sale. Such distributors are either government-controlled or privately owned but independent wholesale distributors, and there can be no assurance that such distributors will not give priority to AB InBev’s competitors. Further, any inability of AB InBev to replace unproductive or inefficient distributors, or any limitations imposed on AB InBev to purchase or own any interest in distributors or wholesalers as a result of contractual restrictions, regulatory changes, changes in legislation or the interpretations of legislation by regulators or courts could adversely impact AB InBev’s business, results of operations and financial condition.

The continued consolidation of retailers in markets in which AB InBev operates could result in reduced profitability for the beer industry as a whole and indirectly adversely affect AB InBev’s financial results.

AB InBev relies on key third parties, including key suppliers, for a range of raw materials for its beer, alcoholic beverages and soft drinks, and for packaging material. The termination of or any material change to arrangements with certain key suppliers or the failure of a key supplier to meet its contractual obligations could have a material impact on AB InBev’s production, distribution and sale of beer, alcoholic beverages and soft drinks and have a material adverse effect on AB InBev’s business, results of operations, cash flows or financial condition. Certain of AB InBev’s subsidiaries may purchase nearly all of their key packaging materials from sole suppliers under multi-year contracts. The loss of or temporary discontinuity of supply from any of these suppliers without sufficient time to develop an alternative source could cause AB InBev to spend increased amounts on such supplies in the future.

Negative publicity surrounding the company, its activities, its personnel or its business partners, consumer perception of the company’s response to political and social issues or catastrophic events, and campaigns by activists, whether or not warranted, connecting the company, its personnel, its supply chain or its business partners with a failure to maintain high ethical, business and environmental, social and governance practices or workplace and human rights issues, whether actual or perceived, could adversely impact the company’s brand image and reputation and may decrease demand for its products, thereby adversely affecting its business. AB InBev has made a number of commitments to respect human rights, including its commitment to the principles and guidance contained in the UN Guiding Principles on Business and Human Rights, through its policies. Allegations, even if untrue, that the company is not respecting its commitments or actual or perceived failure by its suppliers or other business partners to comply with applicable laws or regulations, workplace and labor laws, including child labor laws, or their actual or perceived abuse or misuse of migrant workers could negatively affect AB InBev’s overall reputation and brand image. Activities by the company’s promotional partners that harm their public image or reputation could also have an adverse effect on AB InBev’s reputation or brand image, and may decrease demand for AB InBev’s products, thereby adversely affecting its business.

 

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In addition, a number of key brand names are both licensed to third-party brewers and used by companies over which AB InBev does not have control. Although AB InBev monitors brewing quality to ensure its high standards, to the extent that one of these key brand names or joint ventures, companies in which AB InBev does not own a controlling interest and/or AB InBev’s licensees are subject to negative publicity, it could have a material adverse effect on AB InBev’s business, results of operations, cash flows or financial condition.

A portion of the company’s global portfolio consists of associates in new or developing markets, including investments where the company may have a lesser degree of control over the business operations. The company faces several challenges inherent to these various culturally and geographically diverse business interests. Although the company works with its associates on the implementation of appropriate processes and controls, the company also faces additional risks and uncertainties with respect to these minority investments because the company may be dependent on systems, controls and personnel that are not under the company’s control, such as the risk that the company’s associates may violate applicable laws and regulations, which could have an adverse effect on the company’s business, reputation, results of operations and financial condition.

AB InBev may have a conflict of interest with its majority-owned subsidiaries. For example, a conflict of interest could arise if a dispute arises concerning an alleged contractual breach, which could materially and adversely affect AB InBev’s financial condition. A conflict of interest may also arise as a result of any dual roles played by AB InBev directors who may also be managers or senior officers in the subsidiary. Notwithstanding policies and procedures to address the possibility of such conflicts of interest, AB InBev may not be able to resolve all such conflicts on terms favorable to AB InBev.

The size of AB InBev, contractual limitations it is subject to and its position in the markets in which it operates may decrease its ability to successfully carry out further acquisitions and business integrations. AB InBev cannot enter into further transactions unless it can identify suitable candidates and agree on the terms with them. The size of AB InBev and its position in the markets in which it operates may make it harder to identify suitable candidates, including because it may be harder for AB InBev to obtain regulatory approval for future transactions. If appropriate opportunities do become available, AB InBev may seek to acquire or invest in other businesses; however, any future acquisition may pose regulatory, antitrust and other risks.

AB InBev entered into a consent decree with the U.S. Department of Justice in relation to the combination with SAB, pursuant to which, among other matters, AB InBev’s subsidiary, Anheuser-Busch Companies, LLC, agreed not to acquire control of a distributor if doing so would result in more than 10% of its annual volume being distributed through distributorships controlled by AB InBev in the U.S. AB InBev’s compliance with its obligations under the settlement agreement is monitored by the U.S. Department of Justice and the Monitoring Trustee appointed by them. Were AB InBev to fail to fulfill its obligations under the consent decree, whether intentionally or inadvertently, AB InBev could be subject to monetary fines or other penalties.

A substantial portion of AB InBev’s operations are carried out in developing European, African, Asian and Latin American markets. AB InBev’s operations and equity investments in these markets are subject to the customary risks of operating in developing countries, which include, amongst others, political instability or insurrection, human rights concerns, external interference, financial risks, changes in government policy, political and economic changes, changes in the relations between countries, actions of governmental authorities affecting trade and foreign investment, regulations on repatriation of funds, interpretation and application of local laws and regulations, enforceability of intellectual property and contract rights, local labor conditions and regulations, lack of upkeep of public infrastructure, potential political and economic uncertainty, application of exchange controls, nationalization or expropriation, empowerment legislation and policy, corrupt business environments, crime and lack of law enforcement as well as financial risks, which include risk of illiquidity, inflation, devaluation, price volatility, currency convertibility and country default. Moreover, the economies of developing countries are often affected by changes in other developing market countries, and, accordingly, adverse changes in developing markets elsewhere in the world could have a negative impact on the markets in which AB InBev operates. Such developing market risks could adversely impact AB InBev’s business, results of operations and financial condition. Furthermore, the global reach of AB InBev’s operations exposes it to risks associated with doing business globally, including changes in tariffs. The Office of the United States Trade Representative has enacted tariffs on certain imports into the United States from China. If significant tariffs or other restrictions are placed on imports from China or any retaliatory trade measures are taken by China, this could have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade, which in turn could have a material adverse effect on AB InBev’s business in one or more of its key markets and results of operations.

Competition and changing consumer preferences in its various markets and increased purchasing power of players in AB InBev’s distribution channels could cause AB InBev to reduce prices of its products, increase capital investment, increase marketing and other expenditures or prevent AB InBev from increasing prices to recover higher costs and thereby cause AB InBev to reduce margins or lose market share. Also, innovation faces inherent risks, and the new products AB InBev

 

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introduces may not be successful, while competitors may be able to respond more quickly to the emerging trends, such as the increasing consumer preference for “craft beers” or beyond beer products. In recent years, many industries have seen disruption from non-traditional producers and distributors, in many cases, from digital-only competitors. AB InBev’s business could be negatively affected if it is unable to anticipate changing consumer preference for such platforms. Any of the foregoing could have a material adverse effect on AB InBev’s business, financial condition and results of operations.

If any of AB InBev’s products is defective or found to contain contaminants, AB InBev may be subject to product recalls or other associated liabilities. Although AB InBev maintains insurance against certain product liability (but not product recall) risks, it may not be able to enforce its rights in respect of these policies and, in the event that contamination or a defect occurs, any amounts it recovers may not be sufficient to offset any damage it may suffer, which could adversely impact its business, reputation, prospects, results of operations and financial condition.

In recent years, there has been public and political attention directed at the soft drinks and alcoholic beverage industries, as a result of a rising health and well-being trend. Despite the progress made on AB InBev’s Smart Drinking Goals, AB InBev may be criticized and experience an increase in the number of publications and studies debating its efforts to reduce the harmful consumption of alcohol, as advocates try to shape the public discussions. AB InBev may also be subject to laws and regulations aimed at reducing the affordability or availability of beer in some of its markets. Additional regulatory restrictions on AB InBev’s business, such as those on the legal minimum drinking age, product labeling, opening hours or marketing activities, may cause the social acceptability of beer to decline significantly and consumption trends to shift away from it, which would have a material adverse effect on AB InBev’s business, financial condition and results of operations.

AB InBev is now, and may in the future be, a party to legal proceedings and claims, including collective suits (class actions), and significant damages may be asserted against it. Given the inherent uncertainty of litigation, it is possible that AB InBev might incur liabilities as a consequence of the proceedings and claims brought against it, including those that are not currently believed by it to be reasonably possible, which could have a material adverse effect on AB InBev’s business, results of operations, cash flows or financial position. Important contingencies are disclosed in Note 29 Contingencies of the 2022 consolidated financial statements.

AB InBev could incur significant costs as a result of compliance with, and/or violations of or liabilities under, various regulations that govern AB InBev’s operations or the operations of its licensed third parties, including personal data protection laws such as the General Data Protection Regulation adopted in the European Union, the California Consumer Privacy Act, the Personal Information Protection Law of the People’s Republic of China and the General Personal Data Protection Law adopted in Brazil.

AB InBev may be subject to adverse changes in taxation, which makes up a large proportion of the cost of beer charged to consumers in many jurisdictions. Increases in excise and other indirect taxes applicable to AB InBev’s products tend to adversely affect AB InBev’s revenue or margins, both by reducing overall consumption and by encouraging consumers to switch to other categories of beverages, including unrecorded or informal alcohol products, which could adversely affect the financial results of AB InBev as well as its results of operations. Minimum pricing is another form of fiscal regulation that can affect AB InBev’s profitability. Furthermore, AB InBev may be subject to increased taxation on its operations by national, local or foreign authorities, to higher corporate income tax rates or to new or modified taxation regulations and requirements (including potential changes in Brazil). For example, in response to the increasing globalization and digitalization of trade and business operations, the Organization for Economic Co-operation and Development (OECD) has been working on international tax reform as an extension of its Base Erosion and Profit Shifting project. The reform initiative incorporates a two-pillar approach: Pillar One, which is focused on the re-allocation of some of the taxable profits of multinational enterprises to the markets where consumers are located; and Pillar Two, which is focused on establishing a global minimum corporate taxation rate. In June 2021, the finance ministers of the G7 nations announced an agreement on the principles of the two-pillar approach. Subsequently, in October 2021, the OECD/G20 Inclusive Framework announced that 136 countries and jurisdictions had joined an agreement on the two-pillar approach, including the establishment of a global minimum corporate tax rate of 15%. In December 2021, the OECD published detailed rules to assist in the implementation of Pillar Two and in December 2022, the EU Council announced that EU Member States had reached an agreement to implement the minimum tax component (Pillar Two) of the OECD’s global international tax reform initiative effective 1 January 2024. EU Member States are now obliged to adopt these new rules into their domestic legislation by no later than 31 December 2023. Furthermore, on 16 August 2022, US President Joe Biden approved the Inflation Reduction Act (IRA), whereunder US companies that report over 1 US billion in profits to shareholders are subject to a 15% minimum tax based on book income. Changes in tax treaties, the introduction of new legislation or updates to existing legislation in countries in which we operate, or changes to regulatory interpretations of existing legislation as a result of the OECD tax reform initiatives, the IRA or similar proposals could impose additional taxes on businesses and increase the complexity, burden and cost of tax compliance in countries where we operate.

 

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Antitrust and competition laws and changes in such laws or in the interpretation and enforcement thereof, as well as being subject to regulatory scrutiny, could affect AB InBev’s business or the businesses of its subsidiaries. For example, in connection with AB InBev’s previous acquisitions, various regulatory authorities have imposed (and may impose in the future) conditions with which AB InBev is required to comply. The terms and conditions of certain of such authorizations, approvals and/or clearances required, among other things, the divestiture of the company’s assets or businesses to third parties, changes to the company’s operations, or other restrictions on the company’s ability to operate in certain jurisdictions. Such actions could have a material adverse effect on AB InBev’s business, results of operations, financial condition and prospects. In addition, such conditions could diminish substantially the synergies and advantages which the company expects to achieve from such future transactions.

AB InBev operates its business and markets its products in emerging markets that, as a result of political and economic instability, a lack of well-developed legal systems and potentially corrupt business environments, present it with political, economic and operational risks. Although AB InBev is committed to conducting business in a legal and ethical manner in compliance with local and international statutory requirements and standards applicable to its business, there is a risk that the employees or representatives of AB InBev’s subsidiaries, affiliates, associates, joint ventures/operations or other business interests may take actions that violate applicable laws and regulations that generally prohibit the making of improper payments to foreign government officials for the purpose of obtaining or keeping business, including laws relating to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.

New or expanded export control regulations, economic sanctions, embargoes or other forms of trade restrictions imposed on Russia, Syria, Cuba, Iran or other countries in which AB InBev or its associates do business may curtail AB InBev’s existing business and may result in serious economic challenges in these geographies, which could have an adverse effect on AB InBev and AB InBev’s associates’ operations, and may result in impairment charges on goodwill or other intangible assets or investments in associates.

Although AB InBev’s operations in Cuba through its subsidiary are quantitatively immaterial, the company’s overall business reputation may suffer, or it may face additional regulatory scrutiny as a result of Cuba being a target of U.S. economic and trade sanctions or its subsidiary’s involvement in legal proceedings regarding its operations in Cuba. If investors decide to liquidate or otherwise divest their investments in companies that have operations of any magnitude in Cuba, the market in and value of AB InBev’s securities could be adversely impacted. In addition, Title III of U.S. legislation known as the “Helms-Burton Act” authorizes private lawsuits for damages against anyone who traffics in property confiscated without compensation by the Government of Cuba from persons who at the time were, or have since become, nationals of the United States. As a result of the activation of Title III of the Helms-Burton Act, AB InBev may be subject to potential U.S. litigation exposure beginning 2 May 2019, including claims accrued during the prior suspension of Title III of the Helms-Burton Act. AB InBev has received notice of claims purporting to be made under the Helms-Burton Act. It remains unclear how the activation of Title III of the Helms-Burton Act will impact AB InBev’s U.S. litigation exposure with respect to this notice of claim.

AB InBev relies on the reputation of its brands and its success depends on its ability to maintain and enhance the image and reputation of its existing products and to develop a favorable image and reputation for new products. An event, or series of events, that materially damages the reputation of one or more of AB InBev’s brands could have an adverse effect on the value of that brand and subsequent revenues from that brand or business. Further, any restrictions on the permissible advertising style, media channels and messages used may constrain AB InBev’s marketing activities and thus reduce the value of its brands and related revenues.

AB InBev may not be able to protect its current and future brands and products and defend its intellectual property rights, including trademarks, patents, domain names, trade secrets and know-how, which could have a material adverse effect on its business, results of operations, cash flows or financial condition, and in particular, on AB InBev’s ability to develop its business.

If the business of AB InBev does not develop as expected, impairment charges on goodwill or other intangible assets may be incurred in the future that could be significant and that could have an adverse effect on AB InBev’s results of operations and financial condition.

Climate change or other environmental concerns, or legal, regulatory or market measures to address climate change or other environmental concerns, could have a long-term, material adverse impact on AB InBev’s business and results of operations. In addition, social attitudes, customer preferences and investor sentiment are increasingly influenced by environmental, social and corporate governance (“ESG”) considerations, and as a result AB InBev may face pressure from its shareholders, regulators, suppliers, customers or consumers to further address ESG-related concerns, which may require the company to incur increased costs and expose the company to regulatory inquiry or legal action. If AB InBev fails to meet its 2025 Sustainability Goals or its ambition to achieve net zero emissions across its value chain by 2040 for

 

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any reason, its overall reputation may suffer. Further, water scarcity or poor water quality may affect AB InBev by increasing production costs and capacity constraints, which could adversely affect AB InBev’s business and results of operations. Public expectations for reductions in greenhouse gas emissions, the potential adoption of legal and regulatory requirements designed to address climate change and to increase disclosures related to ESG matters, including climate change and mitigation efforts, and disparate and evolving standards for identifying, measuring and reporting ESG metrics may require the company to incur increased costs, make additional investments and implement new practices and reporting processes, and may heighten the company’s compliance burden and risks. Additionally, AB InBev’s inability to meet its compliance obligations under EU emissions trading regulations may also have an adverse impact on AB InBev’s business and results of operations.

AB InBev’s operations are subject to environmental regulations, which could expose it to significant compliance costs and litigation relating to environmental issues.

Further, AB InBev may be exposed to labor strikes, disputes and work stoppages or slowdowns, within its operations or those of its suppliers, or an interruption or shortage of raw materials for any other reason that could lead to a negative impact on AB InBev’s costs, earnings, financial condition, production level and ability to operate its business. AB InBev’s production may also be affected by work stoppages or slowdowns that affect its suppliers, distributors and retail delivery/logistics providers as a result of disputes under existing collective labor agreements with labor unions, in connection with negotiations of new collective labor agreements or as a result of financial distress for its suppliers. A work stoppage or slowdown at AB InBev’s facilities could interrupt the transport of raw materials and commodities from its suppliers or the transport of its products to its customers. Such disruptions could put a strain on AB InBev’s relationships with suppliers and customers and may have lasting effects on its business even after the disputes with its labor force have been resolved, including as a result of negative publicity.

AB InBev relies on information and operational technology systems, networks and services to support its business processes and activities, including procurement and supply chain, manufacturing, sales, human resource management, distribution and marketing, and relies on information systems, including through services operated or maintained by third parties, to collect, process, transmit, and store electronic information, including, but not limited to, sensitive, confidential or personal information of customers and consumers. The integration of e-commerce, fintech and direct sales in AB InBev’s operations and their increasingly significant contribution to the company’s revenues and sales has increased the amount of information that AB InBev processes and maintains, thereby increasing its potential exposure to a security incident. Information systems of AB InBev’s third-party partners, including suppliers and distributors, are also exposed to cybersecurity incidents which may compromise the confidentiality, integrity and availability of their information systems and result in unauthorized access to AB InBev’s or its customer’s sensitive data. Although AB InBev takes various actions to minimize the likelihood and impact of such cybersecurity incidents and disruptions to information systems, such incidents could impact AB InBev’s business, impact its ability to meet its contractual obligations and expose it to legal claims or regulatory penalties. For example, if outside parties gained access to AB InBev’s confidential data or strategic information and appropriated such information or made such information public, this could harm AB InBev’s reputation or its competitive advantage, or could expose AB InBev or its customers to a risk of loss or misuse of information. More generally, technology disruptions can have a material adverse effect on AB InBev’s business, results of operations, cash flows or financial condition.

AB InBev’s business and operating results could be negatively impacted by natural, social, technical, physical or other disasters, including public health crises and global pandemics. AB InBev’s business and results of operations were negatively impacted by the implementation of COVID-19 restrictions in recent years. While most countries around the world have removed or reduced the restrictions implemented in response to the COVID-19 pandemic, the extent to which the COVID-19 pandemic may continue to impact the company’s financial condition and operations depends on factors beyond AB InBev’s control. The emergence of new variants may result in new restrictions in regions and countries where AB InBev operates, lead to further economic uncertainty and heighten many of the other risks described herein.

AB InBev may not be able to recruit or retain key personnel and successfully manage them, which could disrupt AB InBev’s business and have an unfavorable material effect on AB InBev’s financial position, its income from operations and its competitive position.

Although AB InBev maintains insurance policies to cover various risks, it also uses self-insurance for most of its insurable risks. Should an uninsured loss or a loss in excess of insured limits occur, this could adversely impact AB InBev’s business, results of operations and financial condition.

AB InBev’s ordinary shares currently trade on Euronext Brussels in euros, the Johannesburg Stock Exchange in South African rand, the Mexican Stock Exchange in Mexican pesos and its ordinary shares represented by American Depositary Shares (the “ADSs”) trade on the New York Stock Exchange in U.S. dollars. Fluctuations in the exchange rates between the euro, the South African rand, the Mexican peso and the U.S. dollar may result in temporary differences between the

 

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value of AB InBev’s ordinary shares trading in different currencies, and between its ordinary shares and its ADSs, which may result in heavy trading by investors seeking to exploit such differences.

RISKS ARISING FROM FINANCIAL INSTRUMENTS

Note 27 of the 2022 consolidated financial statements on Risks arising from financial instruments contains detailed information on the company’s exposures to financial risks and its risk management policies.

Events after the reporting date

Please refer to Note 32 Events after the reporting date of the consolidated financial statements.

Corporate governance

For information with respect to Corporate Governance, please refer to the Corporate Governance section, which forms an integral part of our annual report.

2023 presentation update

As from 1 January 2023 mark-to-market gains/(losses) on derivatives related to the hedging of our share-based payment programs will be reported in the non-underlying net finance income/(cost). As a result, we will discontinue disclosing Normalized EPS as a separate metric.

 

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Statement of the Board of Directors

 

 

The Board of Directors of AB InBev SA/NV certifies, on behalf and for the account of the company, that, to their knowledge, (a) the financial statements which have been prepared in accordance with International Financial Reporting Standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the entities included in the consolidation as a whole and (b) the management report includes a fair review of the development and performance of the business and the position of the company and the entities included in the consolidation as a whole, together with a description of the principal risks and uncertainties they face.

 

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Independent auditors’ report

 

 

      

STATUTORY AUDITOR’S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF ANHEUSER-BUSCH INBEV NV/SA ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

 

 

We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated financial statements of Anheuser-Busch InBev NV/SA (the “Company”) and its subsidiaries (jointly “the Group”). This report includes our report on the consolidated financial statements, as well as the other legal and regulatory requirements. This forms part of an integrated whole and is indivisible.

We have been appointed as statutory auditor by the general meeting d.d. 27 April 2022, following the proposal formulated by the board of directors and following the recommendation by the audit committee and the proposal formulated by the works’ council. Our mandate will expire on the date of the general meeting which will deliberate on the annual accounts for the year ended 31 December 2024. We have performed the statutory audit of the consolidated financial statements of Anheuser-Busch InBev NV/SA for four consecutive years.

Report on the consolidated financial statements

Unqualified opinion

We have performed the statutory audit of the Group’s consolidated financial statements, which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterized by a consolidated statement of financial position total of USD 212 943 million and a profit for the year of USD 7 597 million.

In our opinion, the consolidated financial statements give a true and fair view of the Group’s net equity and consolidated financial position as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.

Basis for unqualified opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Furthermore, we have applied the International Standards on Auditing as approved by the IAASB which are applicable to the year-end and which are not yet approved at the national level. Our responsibilities under those standards are further described in the “Statutory auditor’s responsibilities for the audit of the consolidated financial statements” section of our report. We have fulfilled our ethical responsibilities in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Belgium, including the requirements related to independence. We have obtained from the board of directors and Company officials the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

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Key Audit Matter		How our audit addressed the key audit matter
Impairment of goodwill and intangible assets with indefinite useful life   As described in Notes 4, 14 and 15 to the consolidated financial statements, the Company has recorded goodwill and intangible assets with indefinite useful life for an amount of $ 113 010 million and $ 37 652 million, respectively, as of 31 December, 2022. Impairment analyses of goodwill and indefinite-lived intangible assets are performed annually and whenever a triggering event has occurred, in order to determine whether the carrying value exceeds the recoverable amount.   Impairment tests are conducted by management, in accordance with IAS 36, in which management applies a discounted cash flow approach based on current acquisition valuation models for its cash-generating units showing an invested capital to EBITDA multiple above 9x and valuation multiples for its other cash-generating units. The Company uses a strategic plan based on external sources in respect of macro-economic assumptions, industry, inflation and foreign exchange rates, past experience and identified initiatives in terms of market share, revenue, variable and fixed cost, capital expenditure and working capital assumptions. Management’s cash flow projections include significant judgment, estimates and assumptions, related to the weighted average cost of capital and the terminal growth rate.   The principal considerations for our determination that performing procedures relating to the impairment of goodwill and intangible assets with indefinite useful life is a key audit matter are the following: (i) the high degree of auditor judgment and subjectivity in applying procedures relating to the valuation of the cash-generating units due to the significant amount of judgment by management when developing this estimate, (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures and (iii) the significant audit effort necessary in evaluating the significant assumptions relating to the estimate, related to the weighted average cost of capital and the terminal growth rate.		Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill and indefinite-lived asset impairment testing, including controls over the valuation of the Company’s cash-generating units.   These procedures also included, among others, testing management’s process for developing the fair value estimates; evaluating the appropriateness of the discounted cash flow model; testing the completeness, accuracy, and relevance of underlying data used in the models; and, with the assistance of professionals with specialized skill and knowledge, evaluating the significant assumptions used by management, related to the weighted average cost of capital and the terminal growth rate.   Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the cash-generating unit, (ii) the consistency with external market and industry data, (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit and (iv) analysis of sensitivities in the Company’s discounted cash flow model.
Key Audit Matter		How our audit addressed the key audit matter
Uncertain tax positions   As described in Notes 4 and 29 to the consolidated financial statements, significant judgment by management is required in determining the worldwide provision for income tax. There are some transactions and calculations for which the ultimate tax determination is uncertain. Some subsidiaries within the group are involved in tax audits and local enquiries usually in relation to prior years. Investigations and negotiations with local tax authorities are ongoing in various jurisdictions at the balance sheet date and, by their nature, these can take considerable time to conclude. In assessing the amount of any income tax provisions to be recognized in the consolidated financial statements, estimation is made of the expected successful settlement of these matters.   The principal considerations for our determination that performing procedures relating to uncertain tax positions is a key audit matter are the following (i) the high degree of auditor judgment and subjectivity in applying procedures related to uncertain tax positions due to the significant amount of judgment by management when developing this estimate, including a high degree of estimation uncertainty relative to the numerous and complex tax laws, frequency of tax audits, and the considerable time to conclude investigations and negotiations with local tax authorities as a result of such audits, and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.		Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to completeness of the uncertain tax positions, as well as controls over measurement of the liability.   These procedures also included, among others, (i) testing the information used in the calculation of the income tax provisions, including intercompany agreements, international, federal, and state filing positions, and the related final tax returns; (ii) testing the calculation of the income tax provision by jurisdiction, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained; (iii) testing the completeness of management’s assessment of both the identification of uncertain tax positions and possible outcomes thereof; and (iv) evaluating the status and results of income tax audits by the relevant tax authorities.   Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company’s uncertain tax positions, including evaluating the reasonableness of management’s assessment of the chance of loss related to tax positions and the application of relevant tax laws.

 

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Responsibilities of the board of directors for the preparation of the consolidated financial statements

The board of directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the board of directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Statutory auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

In performing our audit, we comply with the legal, regulatory and normative framework applicable to the audit of the consolidated financial statements in Belgium. A statutory audit does not provide any assurance as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current or future business management at Group level. Our responsibilities in respect of the use of the going concern basis of accounting by the board of directors’ are described below.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

●

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

●

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control;

●

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors;

●

Conclude on the appropriateness of the board of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;

●

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

●

Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Responsibilities of the board of directors

The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated financial statements.

Statutory auditor’s responsibilities

In the context of our engagement and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, the directors’ report on the consolidated financial statements and to report on these matters.

Aspects related to the directors’ report on the consolidated financial statements

In our opinion, after having performed specific procedures in relation to the directors’ report on the consolidated financial statements, this directors’ report is consistent with the consolidated financial statements for the year under audit, and it is prepared in accordance with article 3:32 of the Companies’ and Associations’ Code.

In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge acquired resulting from the audit, whether the directors’ report on the consolidated financial statements is materially misstated or contains information which is inadequately disclosed or otherwise misleading. In light of the procedures we have performed, there are no material misstatements we have to report to you.

 

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The non-financial information is included in a separate report of the directors’ report which is part of section “2022 AB InBev Environmental, Social & Governance Report” of the annual report. The report of non-financial information contains the information required by virtue of article 3:32, §2 of the Companies’ and Associations’ Code, and agrees with the consolidated accounts for the same year. The Company has prepared the non-financial information, based on reference framework Global Reporting Initiative (GRI) Standards and relevant United Nations Sustainable Development Goals. However, in accordance with article 3:80, §1, 5° of the Companies’ and Associations’ Code, we do not express an opinion as to whether the non-financial information has been prepared in accordance with the said framework as disclosed in the separate report of the directors’ report on the consolidated accounts.

Statement related to independence

 

●

Our registered audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated financial statements, and our registered audit firm remained independent of the Group in the course of our mandate.

●

The fees for additional services which are compatible with the statutory audit of the consolidated financial statements referred to in article 3:65 of the Companies’ and Associations’ Code are correctly disclosed and itemized in the notes to the consolidated financial statements.

European Uniform Electronic Format (ESEF)

We have also verified, in accordance with the draft standard on the verification of the compliance of the financial statements with the European Uniform Electronic Format (hereinafter “ESEF”), the compliance of the ESEF format with the regulatory technical standards established by the European Delegate Regulation No. 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”).The board of directors is responsible for the preparation, in accordance with ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter “digital consolidated financial statements”) included in the annual financial report. Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements comply in all material respects with the ESEF requirements under the Delegated Regulation.

Based on the work we have performed, we believe that the format of and marking of information in the digital consolidated financial statements included in the annual financial report of Anheuser-Busch InBev NV/SA per 31 December 2022 comply in all material respects with the ESEF requirements under the Delegated Regulation.

Other statements

This report is consistent with the additional report to the audit committee referred to in article 11 of the Regulation (EU) N°537/2014.

Diegem, 1 March 2023

The Statutory Auditor

PwC Bedrijfsrevisoren BV / Reviseurs d’Entreprises SRL

Represented by

Koen Hens

Statutory Auditor

 

26

Consolidated financial statements

 

Consolidated income statement

 

For the year ended 31 December   Million US dollar, except earnings per shares in US dollar		Notes				2022				2021¹
Revenue							57 786				54 304
Cost of sales							(26 305)				(23 097)
Gross profit							31 481				31 207
Distribution expenses							(6 389)				(5 889)
Sales and marketing expenses							(6 752)				(7 292)
Administrative expenses							(4 414)				(4 394)
Other operating income/(expenses)			7				841				805
Profit from operations before non-underlying items							14 768				14 438
Non-underlying costs above profit from operations			8				(251)				(614)
Profit from operations							14 517				13 824
Finance cost			11				(5 792)				(5 234)
Finance income			11				1 146				431
Non-underlying net finance income/(cost)			11				498				(806)
Net finance income/(cost)							(4 148)				(5 609)
Share of result of associates			16				299				248
Non-underlying share of results of associates			8 /16				(1 143)				-
Profit before tax							9 524				8 463
Income tax expense			12				(1 928)				(2 350)
Profit of the period							7 597				6 114
Profit of the period attributable to:
Equity holders of AB InBev							5 969				4 670
Non-controlling interest							1 628				1 444
Basic earnings per share			21				2.97				2.33
Diluted earnings per share			21				2.91				2.28
Basic earnings per share before non-underlying items²			21				3.21				2.85
Diluted earnings per share before non-underlying items²			21				3.15				2.80
Underlying earnings per share²			21				3.03				2.88

The accompanying notes are an integral part of these consolidated financial statements.

 

 

¹ Amended to conform to 2022 presentation.

² Basic earnings per share and diluted earnings per share before non-underlying items and Underlying earnings per share are not defined metrics in IFRS. Refer to Note 21 Changes in equity and earnings per share for more details.

 

27

Consolidated statement of comprehensive income/(loss)

 

For the twelve-month period ended 31 December   Million US dollar		Notes		2022				2021
Profit of the period					7 597				6 114
Other comprehensive income/(loss): items that will not be reclassified to profit or loss:
Re-measurements of post-employment benefits		21			519				504
					519				504
Other comprehensive income/(loss): items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations		21			(1 298)				(4 681)
Effective portion of changes in fair value of net investment hedges					(173)				156
Cash flow hedges recognized in equity					183				1 060
Cash flow hedges reclassified from equity to profit or loss					(546)				(920)
					(1 834)				(4 385)
Other comprehensive income/(loss), net of tax					(1 315)				(3 881)
Total comprehensive income/(loss)					6 283				2 233
Attributable to:
Equity holders of AB InBev					4 994				934
Non-controlling interest					1 289				1 299

The accompanying notes are an integral part of these consolidated financial statements.

 

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Consolidated statement of financial position

 

As of   Million US dollar		Notes				31 December 2022				31 December 2021
ASSETS
Non-current assets
Property, plant and equipment			13				26 671				26 678
Goodwill			14				113 010				115 796
Intangible assets			15				40 209				40 430
Investment in associates			16				4 656				5 874
Investment securities			20				175				161
Deferred tax assets			17				2 300				1 969
Pensions and similar obligations			23				11				5
Income tax receivables							883				1 137
Derivatives			27				60				48
Trade and other receivables			19				1 782				1 580
Total non-current assets							189 757				193 678
Current assets
Investment securities			20				97				374
Inventories			18				6 612				5 399
Income tax receivables							813				381
Derivatives			27				331				621
Trade and other receivables			19				5 330				5 046
Cash and cash equivalents			20				9 973				12 097
Assets classified as held for sale							30				30
Total current assets							23 186				23 949
Total assets							212 943				217 627
EQUITY AND LIABILITIES
Equity
Issued capital			21				1 736				1 736
Share premium							17 620				17 620
Reserves							15 218				15 431
Retained earnings							38 823				33 882
Equity attributable to equity holders of AB InBev							73 398				68 669
Non-controlling interests			30				10 880				10 671
Total equity							84 278				79 340
Non-current liabilities
Interest-bearing loans and borrowings			22				78 880				87 369
Pensions and similar obligations			23				1 534				2 261
Deferred tax liabilities			17				11 818				12 204
Income tax payables							610				726
Derivatives			27				184				100
Trade and other payables			26				859				1 008
Provisions			25				396				436
Total non-current liabilities							94 282				104 104
Current liabilities
Bank overdrafts			20				83				53
Interest-bearing loans and borrowings			22				1 029				1 408
Income tax payables							1 438				1 334
Derivatives			27				5 308				5 786
Trade and other payables			26				26 349				25 434
Provisions			25				176				169
Total current liabilities							34 383				34 184
Total equity and liabilities							212 943				217 627

The accompanying notes are an integral part of these consolidated financial statements.

 

29

Consolidated statement of changes in equity 

 

						Attributable to equity holders of AB InBev
Million US dollar		Notes				Issued Capital				Share premium				Treasury shares				Reserves¹				Other comprehensive income reserves				Retained earnings				Total				Non- controlling interest				Total   Equity
As per 1 January 2021							1 736				17 620				(4 911	)			53 550				(30 841)				30 870				68 024				10 327				78 351
Profit of the period							-				-				-				-				-				4 670				4 670				1 444				6 114
Other comprehensive income/(loss)¹			21				-				-				-				-				(3 736)				-				(3 736)				(145)				(3 881)
Total comprehensive income/(loss)							-				-				-				-				(3 736)				4 670				934				1 299				2 233
Dividends							-				-				-				-				-				(1 139	)			(1 139)				(1 112)				(2 251)
Treasury shares							-				-				917				-				-				(836	)			81				-				81
Share-based payments			24				-				-				-				451				-				-				451				28				478
Hyperinflation monetary adjustments							-				-				-				-				-				231				231				143				374
Scope and other changes							-				-				-				-				-				86				86				(14)				73
As per 31 December 2021							1 736				17 620				(3 994	)			54 001				(34 577)				33 882				68 669				10 671				79 340
						Attributable to equity holders of AB InBev
Million US dollar		Notes				Issued Capital				Share premium				Treasury shares				Reserves				Other comprehensive income reserves				Retained earnings				Total				Non- controlling interest				Total   Equity
As per 1 January 2022							1 736				17 620				(3 994)				54 001				(34 577)				33 882				68 669				10 671				79 340
Profit of the period							-				-				-				-				-				5 969				5 969				1 628				7 597
Other comprehensive income/(loss)			21				-				-				-				-				(976)				-				(976)				(339)				(1 315)
Total comprehensive income/(loss)							-				-				-				-				(976)				5 969				4 994				1 289				6 283
Dividends							-				-				-				-				-				(1 198)				(1 198)				(1 355)				(2 553)
Treasury shares							-				-				289				-				-				(193)				95				-				95
Share-based payments			24				-				-				-				477				-				-				477				20				497
Hyperinflation monetary adjustments							-				-				-				-				-				380				380				236				616
Scope and other changes							-				-				-				-				-				(18)				(18)				19				1
As per 31 December 2022							1 736				17 620				(3 706)				54 477				(35 553)				38 823				73 398				10 880				84 278

The accompanying notes are an integral part of these consolidated financial statements.

 

 

¹ Amended to conform to 2022 presentation.

 

30