Q4 2016 Real-Time Call Brief

Highlights

In the US, we grew our gross profit margin for the 7th consecutive year.

In Mexico, revenue grew by double-digits this year.

Our three global brands, Budweiser, Stella Artois and Corona had another strong year with combined revenues growing 6.5%.

Our premiumization initiatives in both developed and developing markets have generated revenue for hectoliter growth of 4.5%.

We're updating our total synergy guidance to EUR2.8 billion for year, at constant August 2016 exchange rates, to be delivered in the next three to four years.

This number is inclusive of the EUR1.05 billion of cost savings previously identify by SAB, of which EUR547 million had been delivered by the 31st of March 2016.

And additional, EUR282 million of synergies, has been delivered between April 1 and December 31, 2016.

We expect the delivery of these recurring synergies to require estimate one off cash cost of approximately EUR900 million to be incurred in the first three years after closing and of which EUR158 million was spent in 2016.

On that basis, total revenue increased by 2.4% in 2016 where revenues from our global brands growing by 6.5%.

Revenue per hectoliter expanded by 4.1% on a constant geographic basis.

Total volumes were down 2% in the year with own beer down 1.4% and non beer down 6.2%.

EBITDA was roughly flat down 0.1% resulting in EBITDA margin contraction of 92 basis points for 36.8%.

However, as illustrated on slide 6, the company grew EBITDA by 6.3% when excluding Brazil.

Normalized earnings per share decreased EUR2.83 from EUR5.20.

The Board has proposed a final dividend of EUR2 per share for fiscal year 2016 bringing the total dividend for the year to EUR3.60 inline with the prior year.

Last year revenues of our global brands grew by 6.5%.

Budweiser revenues grew by 2.8%, driven by Brazil and the UK.

Stella Artois revenues grew by 6.3% with solid performances in the US and Canada.

Corona led the way, as revenues grew by 14.3%, with especially strong performances in Mexico, UK, Chile, and China.

All volumes in North America declined by 1.6% this year while revenue increased marginally.

Our revenue per hectoliter grew by 1.8% driven by revenue management initiatives and continued premiumization of our portfolio.

EBITDA grew by 2% with margin expansion of 76 bps to 39.8%.

In the US, we estimate industry sales to retailers, STRs, declined by 1% in 2016.

Our own STRs were down 2% in the year resulting in market share loss of approximately 50 bps, based on our estimates an improvement versus last year's declined of 65 bps.

Our US business delivered solid financial performance expanding gross margin by over 220 bps the seventh consecutive year of margin growth.

EBITDA grew by 2.2% to over EUR5.5 billion with the margin expansion of 84 basis points to 40.1%.

Budweiser's consistent marketing campaign around the brand's quality and heritage credentials, continues to resonate with customers and the brand has stabilized it's recent trends with STRs declining by mid single-digits in the quarter and full year.

We have the winning craft portfolio through our local and regional and national brands with the combined portfolio of regional craft brands growing over 30% last year.

Our efforts did not translate into improved volume in share performance as STRs declined mid single-digits and the brand lost approximately 50 bps of share in the year.

Volumes in Latin American West grew by 6% this year driven largely by strong performance in Mexico.

Revenues grew by 9.3% with revenue per hectoliter increasing by 3.1%.

Our EBITDA increased by 5.6% with merging contraction of 160 BPs to 45.8%.

Mexico recorded very strong performance in 2016 with volumes up high single-digits and revenue growing by double-digits.

Our EBITDA grew by high single-digits.

In Colombia was sale volume declined in the low single-digits, since change a control in October 2016.

Revenue grew by mid single-digits due to our revenue management initiatives.

Volumes in the region declined by 5.9% with revenue down 3.9%.

EBITDA declined 16.7% with margin contraction of 686 bits to 44.3%.

In Brazil specially we saw the industry decline by 5.3% this year.

Our beer volumes declined by 6.6% while our non-beer volumes declined by 6% and our beer market share declined to 66.3%.

Our revenues declined 5.3%.

EBITDA was down 19.9% this year with margin contraction of 837 bps, to 45.3%.

Volumes in LAS declined by 5.6% this year.

Revenues grew by 16.9% as a result of pricing in line with inflation as well as revenue management initiatives.

EBITDA grew by 23.4% with margin expansion of 263 basis points to 50.2%.

Turning now to EMEA, all volumes declined by 2.4% in EMEA this year.

Our revenues grew by 4.2% driven by the growth of our premium brands in Western Europe.

EBITDA grew by 3.7% with a margin contraction of 14 bps to 29.5%.

Our beer volumes in South Africa declined by 5% in the fourth quarter.

Our volumes in APAC declined in the full year by 1.2%.

Revenues grew by 1.5%, driven by brand mix.

EBITDA grew by 5.4% with margin expansion of 99 BPs to 27.1%.

In China, industry volumes declined by approximately 3.8% in 2016.

However, our own business which is more focused on the core plus and premium segments performed better than the industry with total volumes down 1.2% in the year.

Revenues grew by 1.3% down 2016 driven by continued premiumization initiatives, while EBITDA grew 6.6% this year with margin expansion of 117 basis points to 23.8%.

Future growth in China is expected to come from the core plus premium and super premium segments.

These segments now accounts for more than 50% of our total China volumes over indexing through the industry.

Stella Artois Corona and the superpremium segment in China which has 9 times of gross margins of the core and value segments.

Corona made strives growing brand awareness and penetration this year with volumes up over 50%.

The selling Corona brands in China Corona growing 50% lot the success based on the Corona SunSets Music Festival activation.

One of our goal is to have low and no alcohol beers represent 20% of our global beer volumes by 2025.

Normalized EPS declined from EUR5.2 per share in full year ‘15 to EUR2.83 per share into full year ‘16.

EUR1.87 per share or 79% of the year-over-year change resulted from changes outside generic course of the business.

EUR0.74 per share resulted from the fudging SABMiller combination drive to the closing of the transaction and full consolidation of SAMiller in the group's results.

EUR0.39 per share resulted from foreign exchange non-cash gains on U.S.

dollar cash held Mexico in full year ‘15 that not reoccurred in full year ‘16 and EUR0.74 per share relates to year-over-year changes of the non-cash mark-to-market adjustments relating to our share based payments.

The net negative impact on our normalized EPS of EUR0.50 per share into ordinary course of business is legally due to the foreign currency devaluation of EUR0.60 per share.

We now turn to the net finance cost where net finance cost for the year were just over EUR5.2 billion compared to about EUR1.2 billion last year.

Additionally, other financial results include a negative mark-to-market adjustments of EUR384 million linked to the hedge of our share-based payment programs compared to a gain of EUR844 million in 2015 a negative swing of just over EUR1.2 billion.

Foreign exchange and hedging activities in the fourth quarter this year led to a negative impact of over EUR300 million.

Additionally, we experienced a non-recurring net finance cost this year of over EUR3.3 billion non-recurring net finance cost includes a negative mark-to-market adjustment of over EUR2 billion related to the portion of the FX hedging of the purchase price for SAB that does not qualified for accounting and under IFRS rules.

We also recognized the negative mark-to-market adjustments of EUR304 million resulting from that derivative instruments entered into to hedge the deferred share instruments issued in a transaction related to the combination with Grupo Modelo compared to a gain of EUR511 million in 2015, a negative swing of EUR815 million.

The normalized effective tax rate for the year was 20.9%, an increase from 19.1% in 2015.

We're expecting the normalized effective tax rate in full year ‘17 to be in the range of 24% to 26%.

Excluding the impact of the SABMiller position, core working capital greater than average of 15.2% in 2016.

The Board is proposing subject to shareholders approval a final dividend of EUR2 per share, which combined with the interim dividend of EUR1.6 per share paid in November last year would lead to our total dividend payments for the fiscal year 2016 in line with last year of EUR3.6 per share.

Our optimal capital structure remains at a net debt to EBITDA ratio of around 2 times.