The Best Beer Company in a Better World.
Krista Tremblay BUS 210A
Introduction
Anheuser-Busch InBev

Anheuser-Busch InBev is a publicly traded company based in Leuven,
Belgium, with American Depositary Receipts on the New York Stock
Exchange.

AB InBev is the world’s largest brewer by volume and one of the world's
top five consumer products companies, with over 200 beer brands.

Beer (90.3%)

Non-Alcoholic Beverages (9.7%)

Ending date of the latest FY: December 31, 2012

CEO: Carlos Brito
https://europeanequities.nyx.com/products/equities/BE0003793107-XBRU/company-information
http://www.ab-inbev.com/go/about_abinbev/our_company/ab_inbev_company_profile.cfm
Geographic Area of Activity

Over 200 beer brands present in over 23 countries, through 6
operational Zones: North America, Latin America North, Latin America
South, Western Europe, Central & Eastern Europe, and Asia Pacific.

Three categories of brands:


Global Brands

Multi-country Brands

Local Champions
Acquisitions of other brands/breweries:

137 beverage plants
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Global, Multi-Country, and Local Champions
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Audit Report

Independent Auditor: Yves Vandenplas (PwC Bedrijfrevisoren Bevba)

The independent auditor believes that AB InBev’s consolidated financial
statements give a true and fair view of the company’s financial position as
of December 31, 2013. The auditor also believes that the given consolidated
financial statements and the results and conclusions drawn from such
reports are in accordance with the IFRS and consistent with the legal and
regulatory standards applicable in Belgium.

In addition to the given above statement, the independent auditor does
recognize that he is unable to comment on the description of the principal
risks and uncertainties that the subsidiaries of AB InBev are facing, the
financial position of such subsidiaries, and the significant influence of certain
figures on their future development. However, the auditor states that these
matters do not present any inconsistencies with the information provided in
the audit.
http://www.ab-inbev.com/go/about_abinbev/our_company/ab_inbev_company_profile.cfm
Stock Market Information
NYSE Euronext Brussels (ABI)
NYSE (BUD)

Most recent price: $92.13 (05/31/13)

Most recent price: €71.13 (05/31/13)

Twelve-month trading range:

Twelve-month trading range:


52 week high: $101.86 (04/10/13)

52 week high: €79.60 (04/03/13)

52 week low: $64.99 (06/1/12)

52 week low: €52.11 (06/1/12)
Dividend per Share: $2.22


As announced on August 24, 2013
Dividend per Share: €1.70 Euro

As announced on August 24, 2013
http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=ABI:B
Buy, Sell, Hold?
AB InBev is currently paying out a decent dividend,
which suggests a certain level of financial well-being.
Furthermore, AB InBev has a stable dividend payment
history, which suggests that the company will continue
to pay out decent dividends. From this, I would advise
holding this stock in order to generate immediate
income.
In addition, the successful and recent launch of many
new products suggests an upward trend in the price
and value of the share.

Bud Light Platinum – most successful beer launch of
2012.

Llime-a-Rita – the second fastest growing brand in its
category.

And the launch of new brands that have gathered
many followers around the world…

Harbin Cooling

Jupiler Force

Leffe Royale
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Income Statement
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Analysis of Income Statement

This Income Statement is multi-step.

The gross profit has increased from both an increase in revenue and a decrease in the cost of
goods sold. The increase in revenue suggests increased sales, and the decrease in cost of
goods sold suggests efficiency improvements in the production and sale of the company’s
goods and services.

The income from operations has also increased, though only by a small margin. This increase
suggests that there was either a small increase in assets or small decrease in liabilities that
came from an increase in the company’s operating activities over a period of time.

Net income has increased relatively drastically. This is a result of the increase in gross profit and
income from operations, as well as fairly stable expenses over the past two years and
decreases in other costs such as finance costs and cost of sales. Such increases in sales and
profit is encouraging, and the decreases in cost of sales and other finance costs suggests that
AB InBev is encouraging efficiency in their value chain.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Balance Sheet
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Analysis of Balance Sheet - Assets
Current Assets

Increase of 8,307 million USD, which is encouraging and suggests an increase in items that will
bring future economic benefit.
Long-term Investments

Increase of 431 million USD, which suggests that AB InBev has invested in assets that will provide
benefits over a long period of time.
Property, Plant, and Equipment

Increase of 439 million USD, which suggests development and improvement in the property, plant,
and equipment that is used in day-to-day operations.
Intangible Assets

Increase of 1,017 million USD, which suggests development and the launch of new
products/brands.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Analysis of Balance Sheet – L & SHE
Current Liabilities

Increase of 764 million USD, which is much smaller than Current Assets. This is encouraging and
suggests that AB InBev’s solvency position is quite strong.
Non-Current Liabilities

Increase of 5,033 million USD, which is expected, given AB InBev’s increase in Assets.
Shareholder’s Equity

Increase of 4,397 million USD, which came mainly from an increase of 3,857 million USD in
Retained Earnings. This is promising because it suggests that AB InBev is taking past profits and
reinvesting in the business to create even greater future profits.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Statement of Cash Flows
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Analysis of Statement of Cash Flows

The cash flows from operations for both 2011 and 2012 are greater than the net income.

After further evaluation of the consolidated financial statements, it is apparent that AB InBev
has experienced growth from 2011 to 2012 through increases in investing activities such as the
following:

439 million USD in new property, plant, and equipment.

464 million USD in new goodwill.

553 million USD in new intangible assets.

394 million USD in new investments in associates.

12 million USD in new investment securities.

134 million USD in new deferred tax assets.

2 million USD in new employee benefits.

Note: there was a decrease in trade and other receivables of 111 million USD.

AB InBev’s primary source of financing is through long-term borrowing (18,463 million USD in
2012).

Cash has increased from 5,312 million USD in 2011 to 7,051 million USD in 2012.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Significant Accounting Policies
1.
Basis of Preparation and Measurement
2.
Functional and Presentation Currency
a.
Subsequent Expenditure
3.
Use of Estimates and Judgments
b.
Depreciation
4.
Principles of Consolidation
c.
Gains and Losses on Sale
5.
Summary of Changes in Accounting Policies
6.
Foreign Currencies
a.
Foreign Currency Transactions
b.
Translation of the Results and Financial Position of Foreign
Operations
c.
7.
Exchange Rates
Intangible Assets
a.
Research and Development
b.
Supply and Distribution Rights
c.
Brands
7.
Property, Plant, and Equipment
8.
Accounting for Leases
9.
Investments
a.
Investments in Equity Securities
b.
Investment in Debt Securities
c.
Other Investments
10.
Inventories
11.
Trade and Other Receivables
12.
Cash and Cash Equivalents
13.
Impairment
a.
Calculation of Recoverable Amount
b.
Reversal of Impairment Losses
i.
Software
ii.
Other Intangible Assets
a.
Repurchase of Share Capital
iii.
Subsequent Expenditure
b.
Dividends
iv.
Amortization
c.
Share Issuance Costs
v.
Gains and Losses on Sale
14.
15.
Share Capital
Provisions
d.
Business Combinations
a.
Restructuring
e.
Goodwill
b.
Onerous Contracts
c.
Disputes and Litigations
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Significant Accounting Policies
16. Employee Benefits
a.
Post-Employment Benefits
24. Derivative Financial Instruments
a.
Cash Flow Hedge Accounting
i.
Defined Contribution Plans
b.
Fair Value Hedge Accounting
ii.
Defined Benefit Plans
c.
Net Investment Hedge Accounting
b.
Other Post-Employment Obligations
25. Segment Reporting
c.
Termination Benefits
26. Non-Recurring Items
17. Bonuses
27. Discontinued Operations and Non-Current Assets Held for Sale
18. Share-Based Payments
28. Recently Issued IFRS
19. Interest-Bearing Loans and Borrowings
a.
Financial Instruments
20. Trade and Other Payables
b.
Consolidated Financial Statements
21. Income Tax
c.
Joint Arrangements
22. Income Recognition
d.
Disclosure of Interests in Other Entities
a.
Goods Sold
e.
Fair Value Measurement
b.
Rental and Royalty Income
f.
Employee Benefits
c.
Government Grants
g.
Separated Financial Statements
d.
Finance Income
h.
Investments in Associates
e.
Dividend Income
i.
Other Standards, Interpretations and Amendments to
Standards
23. Expenses
a.
Finance Costs
b.
Research and Development, Advertising and Promotional
Costs and System Development Costs
c.
Purchasing, Receiving and Warehouse Costs
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Financial Analysis – Liquidity Ratios
Working Capital
CA(20,630) – CL (20,408)
Working Capital
WC is fair relative to AB InBev’s size and capabilities.
= $222 million USD
Current Ratio
CA (20,630) / CL (20,408)
= 1.0109
Receivable Turnover
Net Credit Sales / Avg. Accts. Rec
(39,758) / ((4,023+4,121)/2)
= 9.76
Average Days’ Sales Uncollected
365 / Receivable Turnover (9.76)
= 37.4 days
Current Ratio
The current ratio is not at an ideal rate; however, it is above
1, which suggests that the company should be able to pay
its short term obligations as they come due.
Receivable Turnover
This number is healthy, suggesting that AB InBev is doing a
fairly good job at balancing its credit sales with its ability to
collect debts.
Average Days’ Sales Uncollected
This number is encouraging with a fairly short collection
period.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Financial Analysis – Liquidity Ratios
Inventory Turnover
COGS (16,477)/Avg. Inv ((2,500+2,466)/2))
= 6.6459
Average Days’ Inventory on Hand
365/Inventory Turnover(6.6459)
= 54.92 days
Operating Cycle
Inventory Turnover
This number is relatively low, which suggests a
modest amount of inventory on hand.
Average Days’ Inventory on Hand
This number is fair considering the sheer
quantity of inventory held.
Operating Cycle
The operating cycle is short and healthy.
Days’ Sales + Day’s Inventory
37.4 + 54.92
= 92.32 days
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Financial Analysis – Profitability Ratios
Profit Margin
Net Income / Revenue
Profit Margin
AB InBev has a very healthy profit margin.
= .2373
Asset Turnover
Sales / Avg. Total Assets
39,758 / ((122,621+112,427)/2)
= .3383
Return on Assets
Net Income / Avg. Total Assets
9,434 / ((122,621+112,427)/2)
Asset Turnover
This number is very healthy, stating that
sales per asset is at almost $.34.
Return on Assets
Return on Assets is a very positive revenue
of $.08 per asset turned.
= $.0803
Return on Equity
Net Income / Avg. SHE
9,434 / ((45,441+41,044)/2)
= $.2182
Return on Equity
Return on Equity is also very encouraging,
suggesting that AB InBev is making decent
returns on money invested by its
shareholders.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Financial Analysis – Market Strength
Ratios
Earnings per Share
Price/Earnings per Share
Net Income / Avg. # Common Shares Out.
9,434 / ((1,734+1,734)/2)
= $5.4406
This number is fairly strong, which suggests a
fairly high value to its per-share earnings.
Price/Earnings Ratio
Mkt. Price per Share / EPS
$ 92.13 / $ 5.4406
= 16.9338
Dividend Yield
Dividends per Share / Mkt. Price per Share
NYSE:
$2.22 / $92.13
= $.0241
Dividend Yield
This dividend yield is decently strong,
suggesting a fairly high return on equity
investment.
NYSE Euronext Brussels:
€1.70 / €71.13
= €.0239
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Financial Analysis – Solvency Ratios
Debt-to-Equity
Avg. Total Liabilities / Avg. SHE
74,281.5 / 4,3242.5
= 1.7178
Financing Gap
Days Payable (3066.6196) > OP Cycle (92.32)
= NONE
Debt-to-Equity
The debt-to-equity is fair, suggesting that AB
InBev is financing a decent amount of its
growth with debt and equity.
Financing Gap
There is no financing gap, which is very
encouraging. Furthermore, with such a huge
gap between days payable and operating
cycle, there is little room for concern.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
The Global Brewing Industry
The US brewing industry continues to grow, seeing
an increase in beer sales in 2012 of .9% by volume
[brewersassociation]. Despite still recovering from
the most recent economic downturn, the global
brewing industry has continued to experience
growth and has seen increased consumption in the
past year. Recent regulatory and tax changes in
parts of Europe have decreased beer consumption;
however, such markets are beginning to see more
stability as the dust settles. Moving forward, the
future of the global brewing industry looks bright, as
a strengthening economy and a more accessible
global marketplace emerges.
http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/facts
•
Movement towards microbreweries
encourages diverse portfolios.
•
Trend towards traditional and craft brands.
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
AB InBev in a Global Position
AB InBev continues to invest in new opportunities with
brands and by expanding into new markets. Increased
revenues in 2012 were no doubt attributable to
favorable brand mix and management initiatives. AB
InBev continues to focus on innovation as the driver of
its success – innovation of new products, packaging,
processes, and connections. AB InBev has continued to
lead the market by investing in top line products,
maintaining a strict cost discipline, and pursuing margin
enhancement.
•
Budweiser outside of the US accounts for over 51%
of global Budweiser volume.
•
Volumes grew in the US for the first time since 2008
and market share is showing signs of stability.
Budweiser consolidated its position as the leading
premium beer in China, growing its volume by
double-digits.
•
AB InBev agreed to acquire majority stakes in four
breweries in China, established greenfield
breweries in Fuijan and Henan during 2012, with
four more greenfield breweries to open in the next
two years.
•
AB InBev acquiring the rest of Grupo Modelo: will
double the sales of the company, enhance
earnings, free cash flow, diversify profit stream.
•
AB InBev is continuing to look for new avenues of
expansion, both in market reach and in brand
diversification.
•
Looking into non-alcoholic markets, with
introduction of products such as Stella Artois Cidre
and Juniper Breeze.
http://money.cnn.com/2013/04/19/news/companies/modelo-anheuserbusch/index.html
http://www.brewersassociation.org/pages/business-tools/craft-brewingstatistics/facts
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
An Innovative Growth Strategy
North America
Volumes increased by .5% in 2012
Latin America South
Volumes increased by .1% in 2012
Latin America North
Volumes increased by 2.7% in 2012
Western Europe
Volumes decreased by 4.2% in 2012 –
much due to economic conditions.
Central & Eastern Europe
New initiatives
Bud Light Platinum
Bud Light Lime Lime-a-Rita
Increased Shock Top Choices
Stella Artois Cidre – non-alcoholic
Leffe Royale introduced in Belgium
Juliper Force – non-alcoholic
Quilmes Night
Harbin Cooling
Volumes decreased by 11.3% for 2012 –
much due to industry weakness and
impact of regulatory and tax changes.
Asia Pacific
Volumes increased by 1.9% in 2012
http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/facts
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf
Executive Summary
Anheuser-Busch InBev is a publicly traded company based in Leuven, Belgium, with American Depositary Receipts on the New
York Stock Exchange. AB InBev is the world’s largest brewer by volume and one of the world's top five consumer products
companies. AB InBev aims to be the best beer company in a better world by pursuing a broad differentiation strategy with over
200 beer brands in over 25 countries.
Despite recent economic fluctuations, AB InBev has continued to grow with new brands and into new markets. With a heavily
diversified portfolio, AB InBev has been able to maintain its industry leading position by offering many different products to a
wide array of consumers. Furthermore, AB InBev is looking towards future growth by expanding its presence in markets such as
Brazil, China, Argentina, and Paraguay, and by entering into mutually beneficial partnerships (as seen by the recent merger with
Grupo Modelo). AB InBev has maintained a leading position in an increasingly connected world by capitalizing on strong
relationships with its consumers. Campaigns such as the Green Box Project, The Big Time, and Shock Top Cruisers are all such
evidence of this. In the coming years, overall profits are expected to rise as the economy continues to stabilize, especially in
Europe, and as new growth opportunities come about (FIFA 2014 and the Rio Olympic Games in 2016).
http://www.ab-inbev.com/pdf/AR12/BUD_AR12_EN_Online_v2.pdf