Earnings Call: Q4 2019

Feb 27, 2020

Welcome to the Anheuser Busch InBev's Full Year 2019 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, Chief Executive Officer and Mr. Felipe Dutra, Chief Financial and Solutions Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab inbev.com and click on the Investors tab in the Reports and Results Center page. Today's webcast will be available for on demand playback later today. At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presentation. Some of the information provided during the conference call may contain statements of future expectations and other forward looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. It is possible that AB InBev's actual results and financial condition may differ possibly materially from the anticipated results and financial indicated in these forward looking statements. For a discussion of some of the risks and important factors that could affect AB InBev's future results, see Risk Factors in the company's latest annual report on Form 20 F filed with the Securities and Exchange Commission on the 22nd March 2019. AB InBev assumes no obligation to update or revise any forward looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Carlos Brito. Sir, you may begin. Thank you, Maria, and good morning, good afternoon, everyone. Welcome to our full year and Q4 2019 earnings call. Today, I'll be taking you through the results of the full year and Q4, including highlights from our key markets. I'll then spend a few minutes on our non alcohol and direct to consumer businesses and provide you with an update on our better world agenda before Felipe addresses our financials. We'll then be happy to take your questions. Our performance in 2019 was below our expectations and we're not satisfied with these results. There were many successes, but we also faced many challenges. This year, we took steps to evolve our revenue growth to be more balanced between volume and revenue per hectoliter, which is critical to long term sustainable top and bottom line growth. We grew volumes by more than 1%, our 3rd consecutive year of volume growth with the rate of growth accelerating each year. This contributed to a strong and balanced top line growth led by a broad set of markets including Brazil, Mexico, Colombia and South Africa. Saw an improved performance from the U. S, our largest market, which delivered revenue and EBITDA growth and improved market share trends. We made significant progress towards our deleveraging commitments resulting in a leverage ratio of 4 times at the end of the year, accounting for the proceeds expected to be received from the divestment of the Australian operations, while excluding the last 12 months EBITDA from the Australian operations. That being said, this year was not without its challenges. We faced significant headwinds in our cost base, driven primarily by the highest annual increase in commodity and transactional currency costs in the past decade, which held back EBITDA growth by approximately 200 basis points. We also face challenging macroeconomic environments in any of our markets, including Brazil, Argentina, South Africa and South Korea, leading to consumer trade down and consumption contraction. Additionally, our performance in the second half was impacted nightlife channel in China, our most profitable channel in the country and where our portfolio over indexes. Let me now take you through the results of the year and the quarter. We delivered a more balanced top line growth with revenue up 4.3%, revenue per hectoliter up 3.1% and total volumes up 1.1%. Our beer volumes grew by 0.8% led by our premium portfolio and supported by an improved performance from our core portfolio. Our non beer business had a strong year with volumes up by 4.8% led by Brazil and Colombia. Our EBITDA grew by 2.7 percent with margin contraction of 65 basis points to 40.3%. Increasing commodities and transactional currency costs held back EBITDA growth by approximately 200 basis points. Our underlying EPS decreased by 0.47 dollars to $3.63 The Board has proposed a final dividend of €1 per share for fiscal year 2019, bringing the total dividend for the year to €1.80 Let me now tell you about the results of the quarter. Our revenue in the 4th quarter grew by 2.5% with revenue per hectoliter growth of 0.9%. Growth from our premiumization initiatives was partially offset by advances in our smart affordability strategy, as well as category mix from the rapid growth of our non beer business, which has a lower average revenue per hectoliter than our beer business. Our beer business delivered 0.8% growth, while our non beer business grew by 8%, resulting in total volume growth of 1.6%. EBITDA declined by 5.5% with margin contraction of 336 bps to 40.1%. Our EBITDA performance was impacted by commodity and transactional currency headwinds coupled with cycling a challenging comparable, partially due to the phasing of sales and marketing investments following the 2018 FIFA World Cup. Our global brands, Budweiser, Stella Artois and Corona continue to outperform. In 2019, they grew volume, they grew revenue by 5.2% and by 8% outside of their home markets, where they typically command a premium price point. Budweiser grew revenue by 3.3% outside of its home market of the U. S. Led by Brazil, India and Europe, where it's the fastest growing brand in the region, partially offset by China due to the softness in the Nightlife channel. This performance was on top of a challenging comparable given the brand's global sponsorship of the 2018 FIFA World Cup. We'll continue to leverage Budweiser's strong connection with football through new partnerships with the English Premier League and La Liga, which we activated in more than 20 markets. Stella Artois delivered healthy growth of 6.5% outside of Belgium, led by the U. S. And Brazil. Corona once again led the way with growth of 21% outside of Mexico in addition to a very strong performance in its home market. Growth was broad based with China and South Africa leading the way. The complementary nature of our global brands enables us to meet consumer needs in a variety of occasions and price points, minimizing cannibalization and driving overall growth of the premium segment. I'd now like to go into more detail on some of the commercial highlights across our 6 main markets. Additional details on each country's full year and Q4 2019 performance can be found in our full year results press release from earlier this morning. Starting with the U. S, by now you're likely familiar with our 5 commercial priorities in the U. S, which we put in place 2 years ago. These priorities are ranked in order of the potential incremental revenue growth they will contribute to our ambition to lead the future growth of the U. S. Beer industry. First, expand core plus. The core plus segment in the U. S. Is only half the size of what it is in other mature markets. Therefore, our operating work is to double the size of the corporate segment. In the past 2 years, the segment has grown from 6% of the U. S. Beer category to 8%, largely due to the strong momentum of Michelob Ultra. 2nd, lead and develop super premium. We have to be relevant here if we want to gain share of throats with throats and take advantage of the ongoing premiumization trend. Thus, our ambition is to double our share of the segment. In 2019, our share of segment was flat with Stella toad stabilizing volumes and our craft portfolio growing by double digits, well ahead of the craft segment, which grew by low single digits. 3rd, disrupt the premium segment. Currently, we are a small player in this segment, so our mission is to disrupt. We have doubled our volume in this segment since 2017, led by the triple digit growth of Michelom Ultra Pure Gold Organic. 4th, stabilize our share of mainstream with an ambition to reaching flat share of segment. In 2019, our share of segment decreased by 15 bps. While there is still work to be done, there is a significant improvement from the 60 bps decline of 2 years ago. And finally, our 5th commercial priority is to capture growth beyond beer. In 2019, we effectively leverage our innovative and operational capabilities to deliver double digit revenue growth. In 2020, we're increasing investment to fuel this growth. Have big ambitions for Bud Light Seltzer to grow our share in the fast growing hard seltzer category in which we're currently under index. The brand was launched in January 2020 and is off to a very strong start. In summary, we're making considerable progress across all five of our commercial priorities and believe we have the right strategy in place to lead future growth. Moving now to Mexico. This is our 6th straight year volume, revenue and EBITDA growth in Mexico and we see significant opportunities for future growth. 1st, while per capita consumption is relatively high, it's not evenly distributed across regions and demographics. We see an opportunity to grow per capita consumption through affordability initiatives, addressing new occasions and appealing to new consumers including women. 2nd, we see a massive premiumization opportunity. The premium segment represents a much smaller portion of the industry than it does in other markets of similar maturity, but it's growing rapidly. Our premium portfolio is growing by strong double digits, leveraging the dedicated structure of our high end company. 3rd, we believe we can capture additional share of growth by exploring adjacent categories. We're enhancing our portfolio through new ventures including flavored beers and non alcohol offerings to serve more consumers on more occasions. And 4th, we're expanding our presence in new and existing channels. In 2019, we announced a partnership with OXXO, the largest C store chain in Mexico, which allows us to reach new consumers as we continue to expand to new regions across the country. Additionally, we have a very strong footprint with our own retail format, Modelorama, that enables us to directly interact with consumers. In short, we're extremely proud of our success in Mexico and believe the future of our business is bright. Now let's talk about Colombia. Our business in Colombia had a great year, delivering the highest annual volume growth since the SAB combination. Growth was healthy in both our beer and non beer businesses as we're enhancing our portfolio to address new and existing consumers. We reached the record high share of the premium segment this year, led by our global brands, which grew by more than 50%. We see further growth opportunities as Colombia's premium segment is still relatively small compared to markets of similar maturity and we are investing behind our portfolio to fuel its growth. We have been significantly stepping up our innovation capabilities in our beer and non beer portfolios. And as a result, our innovations contributed to over 30% of our volume growth in 2019. This includes successful package innovations such as 1 liter and single serve returnable offerings and product innovations such as Salva, our new purpose driven water brand. We feel confident that the actions that we're taking will drive further growth of our Colombian business. Turning now to Brazil. In Brazil, we've also been scaling up our innovation capabilities. In 2019, innovation accounted for 10% of our revenue, up from 5% in 2018. We have half the time it takes to launch a product from 8 months to 4 months, allowing us to act with speed to respond to emerging consumer trends. We launched innovations across all segments. In premium, we launched low gluten Stella Artois to address growing health and wellness trends. We created a new more premium visual brand identity for Bex, our German style premium pure malt brand, which delivered very strong growth throughout the year. We launched a local craft brand called Ribeiro Lager from Colorado, which uses Brazilian ingredients and is already the largest craft beer in Brazil. In the core segment, Skol Pure Malt was our largest ever innovation launch in Brazil, which has been a major success and has brought the Skolff brand family back to growth in the Q4. Skolff Pure Malt has also meaningfully contributed to our share gains within the growing pure malt segment, where we're currently under index. We're working to get the fair share of the segment with Sculp Pure Malt in the core, Bohemia in core plus and Bags in premium. Already Bohemia is the number one brand in the segment and Skol Pure Malt is the number 3 as of the Q4. In the value segment, we have leveraged the best In the state of Maranhao, Magnifica is already the leading brand in the value segment within a year of its launch. Our innovation supported Brazil's strong top line performance this year and will continue to leverage our capabilities to fuel further growth. Now let's turn to South Africa. In South Africa, beer has gained approximately 2 percentage points of share of total alcohol due largely to a consistent execution of the category expansion framework. We delivered meaningful results across every element of the framework. In the growing high end segment, where our portfolio currently under indexed, we are working to rapidly close this gap and delivered our highest ever market share in the segment this year. In the core, our bulk offerings returned to growth led by a strong performance from Corning Black Label. Additionally, we extended our portfolio to new consumers and occasions through fast growing brands such as Fly Fish, Gruto Fruit and Kastle Milk Stout. We also continue to leverage our smart affordability initiatives such as Lion Lager, which has brought incremental volume to the beer category by acting as an entry point for price sensitive consumers, especially in light of the challenging macroeconomic environment. We're confident that we have built a strong portfolio in South Africa to meet the needs of consumers across styles and price points. Moving now to China. In China, we're the leaders of both the premium and super premium segments. And today, I'd like to focus on our growing super premium business. Our leadership in the super premium segment has been achieved with the best in class portfolio of brands, which span across styles and occasions and are rolled out strategically across the country depending on the maturity level of a particular region. Corona leads the way as the number one super premium brand in China, complemented by brands such as Blue Girl, Blue Garden and our local craft brand, Boxing Cap. The high end company dedicated sales force and route to market focus exclusively on growing our super premium portfolio was launched successfully in China in 2014 and was later rolled out to 20 additional markets. Operational excellence leveraging the high end company allow us to deliver best in class results in the segment. Furthermore, the Super Premium segment contributed meaningfully to our top and bottom line results as the gross margins approximately 10 times that of core brands. We're excited about the future potential of this segment and believe we have the right portfolio brands and capabilities to continue winning. Before I move on to the next topic, I would like to take a few minutes to update you on the impact of the COVID-nineteen outbreak on our operations in China. 1st and most importantly, the health and safety of our community, our colleagues and our business partners will always be our top priority. We support government measures and recommendations to contain the spread of the virus. As for the business impact, it continues to evolve. So far, we see a significant decline in demand in on premise channels with almost no activity in the nightlife channel and very limited activity in restaurants. We have also observed a meaningful decline in in home channels, although to somewhat lesser extent than in the on premise. On the supply side, we have reopened more than half of our breweries and obtained licenses to reopen the remaining ones with the exception of our brewery in Wuhan according to local government guidelines. Despite the current hardship, we do not believe this crisis will impact the long term potential of our business given our unparalleled brand portfolio route to market and talent pool. We remain committed to support our team, business partners and consumers through this difficult time and they're fully engaged to prepare for a strong recovery when the situation improves. Now I'd like to update you on the progress of 2 of our businesses. At the beginning of 2019, we appointed 2 new chiefs to our leadership team to reflect increasing importance of 2 businesses, a Chief Non Alcohol Beverages Officer and a Chief Own Retail Officer, who leads our direct to consumer businesses. Our non alcohol business represents approximately 10% of our total volume, generating approximately $3,000,000,000 of revenue. Our top 6 markets for this business are Brazil, Honduras, El Salvador, Dominican Republic, Argentina and Colombia. We have a strong portfolio of brands spanning different styles, functions, price points and occasions. This portfolio comprises our own brands such as Granada Antarctica and those of some of the leading beverage companies in the world such as Coca Cola and Pepsi. Our non beer business performed very well in 2019 with volume growth of 5.3%, the result in an evolved strategy that was put in place in 2019 by our new ALCO, new non ALCO leadership team. We seek to grow and optimize our legacy business, expand our portfolio and disrupt the space by capitalizing on trends such as health and wellness. We're proud of the work done in 2019 to elevate the importance of our mail and alcohol business and leverage this momentum into 2020. Our Chief Home Retail Officer leads all of our direct to consumer businesses, which reach approximately 250,000,000 consumers consumer interactions annually through a network of roughly 13,000 stores, pubs and e commerce ventures. This business generates over $1,000,000,000 in revenue and grew by double digits last year. It also enables us to be closer than ever to our consumers leveraging technology to personalized experiences. A good example is our omni channel ecosystem in Brazil that includes our e commerce platform, Z Delivery and our pitch stores, which enables us to leverage data to ensure consumers have a seamless experience both online and offline. Furthermore, the majority of our own retail outlets are franchised, including thousands of Almodellorana stores in Mexico. We're proud to support local communities and promote the thriving business environment in our markets. Moving on, I'd like to spend a few minutes discussing the advancements we've made in our Better World agenda. In March 2018, we launched our 2025 sustainability goals, our most ambitious set of commitments yet that will help us grow our business for the next 100 years and beyond, while reducing our impact on the environment. Our goals are closely aligned to the United Nations Sustainable Development Goals as we believe private sector companies have a responsibility to contribute to solutions for some of the world's most pressing and complex issues. I'd like to update you on the progress we have made on each goal in 2019. In 2019, we continue to support our farmers through agricultural development. We're working with over 20,000 farmers in 13 countries to grow the best barley, wheat, cassava, hops, maize, rice and sorghum. We set an ambitious goal that 100% of our direct farmers will be skilled, connected and financially empowered by 2025. Today, 50% of our direct farmers are skilled, 45% are connected and 35% are financially empowered. When it comes to our water stewardship efforts, we leverage our partnership with the Nature Conservancy to accelerate the establishment of waterfronts in Argentina, Colombia, El Salvador and Mexico and support watershed protection projects in California and Colorado in the U. S. We also continued our work with the World Wildlife Fund, focusing on conservation and reforestation efforts and addressing local water challenges in Bolivia, Mozambique, Uganda and Zambia. We're constantly looking for ways to increase the recycled content in our packaging and advocate for returnable solutions. We have committed that by 2025, 100 percent of our products will be available in packaging that's either returnable or made from majority recycled content. Currently, over 40% of our volume is in returnable packaging and we have achieved 42.3 percent recycled content in our one way glass bottles. Climate change has a far reaching impact on our business and the communities in which we live and work. We have committed to transition to 100 percent of our purchased electricity to come from renewable sources by 2025. Today, 61% of our purchase electricity is under contract from renewable sources. Now I'd like to hand it over to Filipe, who will take you through our 2019 earnings cash flow and capital allocation. Filipe? Thank you, Brito. Good morning, good afternoon, everyone. Let's start with an update on our net finance costs. Net finance costs in the year were over $4,300,000,000 compared to over $6,800,000,000 in 2018. This decrease was mainly driven by lower mark to market gains linked to the hedging of our share based payment program of nearly $900,000,000 compared to a loss of nearly $1,800,000,000 in 2018. Excluding the impact of the gains and losses related to the hedging of our share based payment programs, our ETR in 2019 was 24.9%, slightly better than the low end of our guidance. This was due to a significantly lower ETR in the 4th quarter driven by accrued benefits from interest and own capital in Brazil. Our effective tax rate guidance for the full year 2020 is between 20 7% 29%, excluding any gains and losses related to the hedging of our share based payment programs. The expected increase in ETR is driven by the full impact of the U. S. Tax reform, record low interest rates in Brazil, which minimize the interest on capital benefit and the change in the country mix. Moving on now to earnings per share. Our underlying EPS this year defined as our normalized EPS excluding the impact of mark to market related to the hedging of our share based payment programs and hyperinflation adjustment in Argentina decreased by $0.47 from $4.10 to $3.63 The decrease was mainly driven by lower normalized EBIT and net finance costs excluding the impact of the hedging of our share based payment programs. We closed fiscal year 2019 with $13,400,000,000 of cash flow from operations and EBITDA margin of $40,300,000,000 and converted 25.5 percent of our net revenue into cash, well ahead of most of our peers in all three metrics. Moving to core working capital, another important dimension for cash flow generation. Core working capital consists of those elements of working capital, which we consider fundamental to the operation of our business. It excludes certain items which management has little or no ability to influence, for example, payroll related payables. In 2019, we reached an average level of core working capital as a percentage of revenue of negative 13.4 percent. This number is broadly in line with the last few years despite the significant country mix headwinds. We continue to see opportunities to further drive core working capital as a percentage of net revenue. I will now spend some time discussing our debt profile. As you see on this slide, our debt maturity profile is well distributed across the next several years. 2019, we undertook a significant refinancing effort, which further extended our weighted average maturity and gives us a comfortable maturity profile. In addition, we took significant steps to retire debt, including the expected divestitures of our Australian operations not yet reflected in this slide. Our strong cash flow generation provides us with sufficient caution to repay or refinance outstanding debt without being dependent on capital market transactions to meet our funding needs. In addition, we maintained roughly $60,000,000,000 of liquidity comprised of cash and revolving credit facilities. Our debt portfolio remains insulated from interest rate volatility as 91% of the debt holds a fixed rate. Furthermore, the portfolio is comprised of a diverse mix of currencies. 57 percent of our debt is denominated in U. S. Dollars and 29% in euro. We use the euro as a proxy for a basket of emerging market currencies, giving its correlation with our key emerging market currencies. In addition, the euro has the advantage of providing access to bond markets with significantly higher liquidity and lower costs when compared to those of emerging market currencies. Our weighted average maturity is roughly 14 years and there is no year in which the total debt maturing exceeds our liquidity as you have seen on the previous slide. Finally, we have a weighted average coupon rate of approximately 4%. Accounting for the proceeds expected to be received from the divestment of the Australian operations, while excluding the last 12 months of its EBITDA, our net debt to EBITDA ratio was 4 times for the 12 month period ending December 31, 2019. The leveraging to around 2 times remains our commitment and we will prioritize debt repayment in order to meet this objective. As you can see on this slide, our capital allocation objectives remain unchanged. And with that, I will hand back to Maria to begin the Q and A section. Thank you. Thank you. The floor is now open for questions. In the interest of time, we will limit participants to one question and one follow-up question. Our first question is coming from the line of Robert Ottenstein of Evercore ISI. Great. Thank you very much. Two questions. 1, the revenue per hectoliter was disappointing. And it's you gave some good explanations for that in terms of consumer mix, affordability initiatives, the non beer. And so all of that makes sense, but it is a metric that is important. It's one that in the past we followed to get a sense of how you're doing in revenue management. So I'm wondering if you can give us a sense of what the revenue per hectoliter look like for just beer or any kind of comparable measure on that metric. So that would be number 1. And then second, I was just wondering, Frito, in particular, if you could give us your assessment of the hard seltzer outlook in the U. S? Based on our numbers, it looks like you're getting about an 18% market share. I know it's early days. Does that sound about right? And do you see hard seltzers being margin accretive to the U. S. Business? Thank you. Thank you, Robert. So your first question, I mean, about net revenue per hectoliter in the 4th quarter. So before I go, Dylan, just remind us that the net revenue for the full year was 3.1% and the 4th quarter came down. Reasons why it came down, first, I mean, in Europe, we're expanding our portfolio into new customer occasions and price tiers within premium. So for example, by the launch of Bud, Budweiser in Netherlands and France, that's early days, but doing very well. This, of course, is a dilutive impact on our net revenue per quarter, but it's incremental to our portfolio because it addresses price segments in which we were totally absent. Then in Brazil, we saw the impact of category mix, due to the rapid growth of non beer versus beer. So for example, beer grew 3%, CSD, carbonated soft drinks, water, everything else that's non alcohol grew 11%. So that of course, the non beer business has a lower revenue per hectoliter, but again, it's incremental business. So another thing in Brazil is that we have implemented some tactical revenue management initiatives. You remember that in Q3, we had a price increase that had some issues in terms of its implementation given the competitive reaction or competitive reaction that took price down at the same time. And then as these things came to more of a normality, but it only came halfway through the Q4. So we still have some impact in that in the Q4. In China, we also had some tough comps. If you remember, Q4 last year in China, our revenue per hectoliter grew over 10%. So we're cycling that in China. So I think those are some reasons why the net revenue per hectoliter in the 4th quarter was below the yearly average. But again, it's 1 quarter only. In terms of your question about still on the net revenue, I think what we have to say about pricing in general, if we step back, Robert, is that in many of our emerging markets in which we operate, consumer disposable income as that growth has lagged considerably lagged inflation over the past several years. This has impacted the relative affordability of beer and in many cases a negative impact on per capita consumption of beer. So in order to sustain and accelerate the long term growth prospects of the company, we're taking many factors into consideration. So we run a big study in terms of price elasticity in those markets with many factors being taken into consideration at the local level. So the health of the consumer environment relative to the affordability, inflation, taxes, competitive environment and we found by market that there is a better place to place this healthy top line balance in several of these markets, resulting in very strong top line growth in markets such as Mexico, South Africa and Colombia. We study those markets and we believe that the disciplined execution of the strategy will enable us to accelerate top line growth. If you remember, this is all connected to the category expansion framework. So there's not a new framework. It's just that in the category expansion framework that has many components, we've been very busy in the last 3, 4 years since we learned about the model in the core, flavored, styles, premium side of the category expansion framework and last on the smart affordability. And this year after all this elasticity studies that we learn more about each market as opposed to big averages because the logistics change over time, because of income, disposable income, inflation, taxes and everything and employment, so many things. We decided to review some of the parameters that we used to have And we saw that there were opportunities for us to tap into that volume pool and profit pool. So that's one thing that also relates to the whole thing about smart affordability. So long answer, but just touch on different points on our pricing and revenue strategy. In terms of your second question about hard seltzer, for sure, it's a huge opportunity for us and for the beer industry in general in the U. S. It's bringing new consumers to the category from wine, from spirits, so much so that the category went back to growth in the Q4 of last year. We started in this category with a 10% share. We're number 3 today, but as you said, we have a portfolio approach. So we have Bonniv, we have NetEcelsior and now since Super Bowl, since January this year, we have Bud Light Seltzer. And you're right, I mean, we're getting very quickly to close the 20 share of segment and we intend to get to number 2 position with this portfolio approach that again is catering to different price points and different consumer needs and occasions And that's the way we do with global brands as well. It's interesting to think when you think about Seltzer, when you think what happened with craft in the U. S. Craft is also the emerging trend, helped to be a category, brought new consumers. So not unlike Seltzer, we were behind because when we got to be well supported, like a support for we had and no craft quickly in a few years we built a portfolio of craft brands that today grows at many, many times over what the craft industry grows. We grow a strong double digit versus a low single digit for the craft industry. And that was done through some years. And today, we're one of the biggest players in the U. S. And growing way ahead of the industry. So and the good news about Seltzer compared to Craft is that Seltzer is a game of national brands, which of course cater as much more to the way we go to market. So I think it's all good news, very profitable. It's incremental, brings new people to the category. It addresses a lot of trends that are out there in terms of health and wellness, more co adds and with flavors, there are many things that can be accomplished. Is it margin accretive? Would you expect Hard Seltzer to be margin accretive for you in the U. S. This year? Or do you need more scale? It is. Once production is streamlined, because today is not yet there, as you can imagine, we have to invest. And today, we're still dependent on a couple of beers, a couple of breweries to cover the whole breweries. And then of course, and that's what our U. S. Business guys announced. We announced an investment of $100,000,000 in our Beyond Beer Big Bats in terms of OpEx and CapEx. And some of that CapEx is not only for capacity, but also for localization of capacity. So we can cover the whole U. S. From a more streamlined perspective. Thank you very much. Thank you. Our next question comes from the line of Trevor Stirling of Bernstein. Trevor, your line is open. Make sure you're not on mute. And we'll move on to our next question comes from the line of Edward Mundy of Jefferies. Accelerate versus the 4.6% you did in fiscal 'thirteen to 'seventeen given the more growthy portfolio? Ed, we didn't get the first part of your question for some reason. Can you start again, please? Yes, sure. So is that better? Yes. Good. Okay. So first part of my question is that back in the cost of markets event in South Africa in 2018, you didn't provide guidance, but I think you indicated that you expected group growth to accelerate versus the last 5 years fiscal 'thirteen to 'seventeen of 4.6%, partly because of the more growth you portfolio that you're getting from SABMiller as well as the enhanced revenue management toolkit from the category expansion model framework. I appreciate in the very near term, the external environment has been incredibly tough, but has anything changed in how you look at the opportunity today for your business for growth? And my follow-up question is around COVID-nineteen. And I appreciate you don't have a crystal ball on where COVID-nineteen ultimately ends up. But I was wondering whether you could elaborate a little bit more around some of the assumptions around the scale and magnitude of the virus as to how it relates to your guidance of 2% to 5% EBITDA growth? No, I mean, given what we said in terms of our belief that we can grow top line faster, if that was your question in South Africa in August that year, we continue to believe the same thing. This year, our top line was below that average. It was 4.3 as opposed to 4.6 because of a couple of things. First, China in the second half decelerated, right, because of the nice live channel. 2nd, Brazil, Korea, we had Korea, we had macro issues, industry is down by high single digits. We also had a price increase that we implemented. And when looking back, the execution of that price increase was not optimum. The same can be said about Brazil, in that consumers remain under pressure, things are getting better, but the price increase was done at a moment when the competitors were doing something very different and that took a while for us to streamline. And because of that, we lost volume. And also because we're under indexed in some fast growing segments like seltzer and pure malt. So I mean, as we fix pure malt as we do in Brazil, think about this, pure malt in Brazil, we had no presence. Today, in less than a year or so, we have the number 1 and 3 position as of the Q4 already in the fuel malt section sector in Brazil, and we would like to have the first three positions there. Telstra, we're cap we came from the high from the 10% share, but we are growing very fast and we think the portfolio approach will get us to number 2 position in that segment. In premium in South Africa, for example, we had an amazing performance this quarter, again, record high share, but still below our fair share. So and that segment is growing. So there is some segment mix shift that is not in the 3 I mentioned, Seltzer, Pure Mall, Premium South Africa, for example, that we need to accelerate our participation in those segments, so we can also benefit from that growth. But in terms of the overall business, we had some important countries for us like China, Brazil, Korea of course less important, but China and Brazil were 1 because of the channel that we over indexed, Nightlife the other one for price increase and its execution in Korea, both macro and price increase. So our ambitions are unchanged. We want to continue to grow with a more balanced top line and that is between volume and net revenue. And we think as a company, we can do better than the average of the 4.6%. This year, we did 4.3% because of all of the headwinds we mentioned at first. But we see opportunities in segments where we under index and that we're taking measures to grow and catch up fast in those segments. In terms of COVID-nineteen, what we put in our release is that, first of all, we're talking about COVID-nineteen China, because that's where we have information about it and that's where it's relevant at this point. So for the 1st 2 months of 2020, we estimate that this outbreak has resulted in lost revenue of approximately $285,000,000 in terms of ABI and loss EBITDA of approximately 170,000,000 dollars at the EBITDA level. So the financial impact on our business in China is difficult to estimate, given it's dependent on the containment of the virus, especially the speed by which our customers and consumers resume their normal operations and lives, which can be different by channel and province. In China, we have more than 30 provinces and each province is adopting a slightly different way of going back to normal life. Some provinces were hardly hit or harder hit, so they're taking a bit more time, some others are going back to business a bit faster. And we're anticipating our customers to resume their operations in the course of Q2 Q2 of this year. So and the impact of our current view is reflected on our estimates for Q1 and full year that we gave in the outlook session. And but of course, this is based on what we know today, right? So this is where we are today. And the good news, I mean, the silver lining in this whole thing is that Chinese consumers were surveyed by Kantar, a market research company regarding the impact of COVID on their consumption patterns and what they intend to do once they are released on their confinement and quarantine. And out of the 10 top things they want to do, 6, the top 6 are totally within our business we own. They want to go back to restaurants, they want to go back to meet friends, to dine out, to entertain, to go outdoors, indoor entertainment, to do everything that they would normally do. So that's squarely within our dream of bringing people together. So that's why our team in China has a crisis room that's now working, of course, on a daily basis. We have weekly calls with the global guys as well. And we're monitoring province by province, channel by channel, because we want to come back very fast because we think when it comes back, it will be very fast. If you look at SARS, that's the way it came back. And as a company, given the portfolio we have, the channels that we're strong and the channels that we're getting stronger like e commerce because people are changing habits and we have a very good share, higher than the average market share of the market in those channels. We want to be an even stronger company in China after this crisis is over. But right now, of course, the first priority is safe to our people, community consumers. But once the government guidelines allow us to go back to business, we're prepared and we have as the recovery takes place. So we're very prepared and we feel good about it in terms of the recovery. Great. Thank you. Thank you, Adam. Our next question comes from the line of Trevor Stirling of Bernstein. Hello, Richard. Can you hear me this time? Yes. Great. Richard, in your prepared remarks and in press release, you talked a little about being not satisfied. And you talked about some of the headwinds that emerged over 2019 that weren't there when you started the year. But if you look at the elements of performance that were actually inside your own control, which elements of your own, say, within control performance are you not satisfied with and would you aim to resolve next year? Well, I think as you said, some elements we anticipated for the market. Just to be in the name of completeness, I'll start from there, Trevor. So we said that the second half of the year would be tougher because of the timing of our commodity and FX hedges. We also said it would be tougher because of the sales and marketing phasing coming from a World Cup year, a year before. We also said that there was some inventory in China that was advanced in Q2 for some activities. Every year is a bit different. This year was Q2 and that would take away a little bit from Q3. So all that was said was public and all that. On top of that, things we didn't expect was, first, the price increase we executed in Brazil in the 1st week of July in terms of execution, was not very successful. Not because we executed it poorly, but because we didn't anticipate market participants reactions and some participants took their price down as they're taking our price up. So that took a while, some months, including into the Q4 with volume impacts to get fixed. Let's put it this way, to finance new balance. So we lost volume in Q3 and part of Q4 in a market that's very important for us in a period where that quarter is important, the last quarter for Brazil is the main quarter. So that was not our plan. In Korea, the same thing happened. We implemented the price increase in April. Every 3 years, we implement the price increase in Korea. We implemented 1 in April, the same thing happened. Competition took a different view. And then we had to roll back price in October. So again, we lost a lot of the summer in South Korea. So I think those two things are things that looking back, we could have done better. Nightlife and channel, it was hard to predict because it was something that was mandated by it was an externality. Maybe we could have shipped resources faster as we're doing now to other channels. And as said before, we under indexed in some fast growing channels like seltzer, pure malt and example South African premium. We're growing all these channels, but maybe we could have started 6 months, a year before, then whichever time we started. So I think those are things that are within our control that we learned from it. We intend to do a better job going forward. But you're right, some things were externalities. We had no control and we normally focus on the things we control. We're very asset with ourselves, as you know, and don't take it we don't take this lightly. So we're learning and trying to see how we can do it better next time around. Just my follow-up question, Brito. Told you in Brazil at the start of it, part of the problem was that beer grew 3% and non beer at 11%. If I look at beer Brazil from the Ambev accounts, price mix there was down 20 bps in the quarter. Was that due to rebating of price increases to try and regain some volume in Q4? Well, that was due to many things, including the one I just mentioned that the issue we have with the execution of the price increase in the 3rd quarter fleet led into the Q4. So that, of course, affected the year on year comparison. Also this quarter, the positive brand mix from premium growth was more than offset by this tactical revenue measurement initiatives. So that's offset and the negative geographic mix, right, from expanding more in the North and the Northeast as pure malt started growing and accelerating. Pure malt is more prevalent these days in the North and the Northeast. So that has a geographic mix. And you know that we make those margins because the socioeconomic classes, the lower socioeconomic classes are more prevalent there as well as some smart affordability initiatives like the growth of our local crop beers. On top of all that, you also had non alcohol, as you said, growing way ahead of beer with lower net revenue per hectoliter but incremental margins. I mean, you put all this in the mix. That was why we didn't grow much in terms of net revenue per hectoliter. On the other hand, if you look at the full year, in Brazil, net level per hectoliter grew by 1.9%. So I mean, of course, impacted net revenue per accrual. Net revenue in Brazil full year grew 7%. Total volume in Brazil grew 5%. So I'm very happy to see Brazil back to growth. This is great. Brazil hasn't grown volume for some years, but it's great to see net revenue more balanced with volume growth in both beer and non beer. It's great to see premium growing double digits, even in the face of a cost of sales that went up by 15.5% during the year. So that's something that was really brutal, doesn't happen all the time. And that cost of sales took let me check here, took 300 basis points from our EBITDA. So the EBITDA in Brazil declined by 4.4%. 3 percentage points of that 4% was the commodity and FX that was higher than any time we can remember. So I mean that's also something that should be mentioned. Thank you very much, Vijay. You're welcome. Thanks. Our next question comes from the line of Selim Panuvi of JPMorgan. Yes. Thank you very much. Good morning, everyone. My question is on a follow-up on the pricemix. I wanted to understand, first of all, if you could help us how big is smart affordability as a percentage of sales in 2019? And what would be the plan 2020 in terms of rollout? And just what you were saying in terms of pricing, do you think that the environment is looking better in terms of pricing increase for 2020? I'm also asking that because you're guiding for raw material cost and transaction to be around mid single digit for 2020. In that regard, it would be helpful if you could tell us why is it that you have mid single digit, Accruzim transaction is a big impact and in which countries we should expect this to be the most impactful? Thank you. Hi, Celine. In terms of smart So, again, this belongs to the category expansion framework. So it's not a new idea. It's just that we've been active in all dimensions of more active in all dimensions of the category expansion framework and less active on smart affordability. So now that we have more studies, more insights, more learnings because we try different things in different places and we build toolkits to be replicable, we now can be more active. And especially in markets like Africa and Latin America, there's a lot to be done there because people need a lot of people don't consume beer because they can't afford it, right? And if this is incremental volume done the right way, this can be dilutive to net revenue, but it's incremental to dollars in terms of margins. So we have been expanding our portfolio to offer more successful price points. This includes new packaging formats and also new beers brewed with local crops. So smart affordability is a big umbrella that includes all this. This offering is driving incremental profit, but generally have a dilutive effect from net revenue per hectoliter as I was saying. And but they are contributing meaningfully to growth in many of our markets, including Brazil, Argentina, Colombia, Ecuador, South Africa. So that was your first question. We don't have any guidance that we're giving at this point of how big or how impactful this will be. But make sure that this is part of the category expansion framework. Category expansion framework is about enlarging the category, so we can create more value in the category. It's not about getting net revenue down. In the category expansion framework, you have 5 dimensions. You have core with subdivisions of classic and easy drinking. You have flavors, you have styles, you have premium and you have smart affordability. Smart affordability is the only one of the 5 that could dilute net revenue per hectoliter. But it can bring new consumers to the category. You have to remember that in these geographies, there are many people that even consume cheap alcohol that has no quality from B brands or illegal alcohol. So that's what we're trying to do, trying to get consumers into our category, safer for them as well because of branded products, more high quality products. So but again, this doesn't live by itself. This lives in the context of the category expansion framework that has 5 dimensions. There's one of them and the only one that goes from core down. That's the first thing. Your second question was about price. And can you just remind us exactly you asked whether the environment is better for price, right? Yes. I mean, you mentioned earlier that it has been difficult for you. Execution of pricing has been complicated. And since you are mentioning still a high raw material cost inflation, will you be able this year to get better pricing? Yes. No, no, no. I mentioned 2 markets. I mentioned Brazil and South Korea. I didn't see I didn't say the price was being tough. Said that pricing execution looking back maybe could have done could have been better planned, right? So that's what we learned from it. That at the end, the market moved somewhat, but in a different timing. And we would normally do pricing in a different time. We tried to do in a different time from normal and it didn't work so well. So it was more on the execution piece than believing that there is no pricing possibilities. Because again, remember, as we grow premium, as we grow styles, as again within the category expansion framework, there are many things that can create net revenue opportunities for Equitor not because of price, but because of mix. So that's the story in China, where we don't do a lot of price increases, but the mix gets net revenue to grow every year by 6%, 7% at least in the past. And again, when you get all factors embedded, we're giving an EBITDA guidance for next year given what we know today about COVID 19, our EBITDA growing organically between 2% 5%. So I think this encompasses everything. And we also gave guidance including for the Q1 and said that the growth organically of EBITDA for total ABI should be around minus 10% because of all the things we said, tough comparable in Brazil, right? Let's remember that Brazil had an amazing quarter last year and that we're comping that And that's the COVID-nineteen that is impacting the China business. Thank you. Our next question comes from the line of Carlos Laboy of HSBC. Yes. Good morning, everyone. Brito, we see considerable discounting in some of our emerging market tours of local premium brands, whether it's maybe Bohemia in Brazil, Castellite in South Africa or even of global brands in some of these markets, when is it helpful and strategically important to discount and when is destructive? How does this fit into your broader strategy for building these premium brands? Well, this thing is price ladder, La Bois, as you know, is very dynamic. So for example, I'll give you an example. Pure malt in Brazil was a segment that 5 years was non existent. All of a sudden you create a segment called pure malt. We didn't create, but all of a sudden somebody created, others jumped into that bandwagon, including us. And now, Bohemia is the number one in there. So, Bohemia was in a place, which was premium segment. The premium segment was more and more populated by international brands. So Bohemia was losing a little bit of that edge of premium. So it went to the premium segment, still premium within pure malt and now it's the number one category. So it's now called core plus. So yes, we repositioned Bohemia from premium to core plus because we asked Bohemia to play a different role because now we have a big portfolio of local core brands, I mean local craft brands and premium brands in the premium segment. And Bohemia, you can find position for everybody, but in the premium segment, Bohemia had an amazing role to play so much so that has grown by triple digits in the last 3 years and he became only in 3 years the leader in the pure malt segment at a corporal as price as opposed to be walking sideways or backwards in the premium segment. So I think you have to be you have to understand that some brands will play different roles because sometimes segments get redefined when a new segment comes in, right? So pure malt in Brazil redefines the segment. So it's a portfolio strategy. That's why it's good to have brands. It's sometimes just like a soccer player sitting on the bench, you call 1 bench to play because there is a new role for that brand to play and the brand goes and play that brand. So I give kudos to our guys in Brazil because they recognize that Bohemia that was being cluttered in the premium segment, but by all these international brands from us and competition and craft brands had a bigger role to play in core plus, it was a bet, they took the risk and in a few years it became the number one brand in the premium segment, core plus premium brands, I mean, pure malt core plus segment in Brazil. So I think that's what we're always trying to do. In Africa, for example, not Kelsallites, but calling Black Label, we saw that there was an opportunity because of the growth of the premium segment that's going way ahead of anybody's expectation that core was being pressured by cheap alcohol, not beer cell, but wine in Tetra Pak and all that and premium beer appealing to some core consumers. So there was a role to be played by calling Black Label going R1 down at some point, going to R15 and growing as it's growing out as opposed to be in 16 or 17 and been declining. But because if calling Black Label was our own brand, you could say, well, you took your own brand and took down in pricing, yes. But because it's part of a portfolio, that brand came down in price and it's doing very well. But other brands went up in price, right? So we didn't have enough capacity for our fabs in South Africa, now we do. So now we're playing that role that before we were not playing because of lack of capacity. So now we can again appeal to some consumers that as you know, South Africa is going through tough economic times. They are budget consumers. Those consumers exist. We would like to be the beer that brings people together, all people, not just the ones that can buy core plus and premium, super premium. There's also in the category expansion framework, smart affordability and core. And that's what we need to continue to look at. And this is a dynamic and that's why it's good to have portfolio. Thank you. You're welcome. Our next question comes from the line of Simon Hales of Citi. Thank you. Afternoon, morning, Brito and Felipe. A couple please for me. I wonder just following on, Brito, from your comments around the category and sort of management framework and the increased implementation of the affordability strategy. What does the strategy sort of mean? And how do you think about perhaps medium term group margins, margin development from here? Do you think you can still expand margins over the medium term with the application of that strategic approach as it stands? And secondly, just on the sorry. Jose? I think so. I think so, because you should think of the category expansion framework, it has core in the middle. You have styles going to one side, flavors going to the other side and you have premium going up and you have smart affordability going from core down. We've been active in all 5, but not at the same intensity that we've done core. And then we started doing premium. We still have lots to do in flavor and styles and those are very accretive to margins. So smart affordability is the only one that dilutes margin, but brings new consumers into the category and it's incremental to margin dollars. So I mean, if you look at all five dimensions, being only one dilutive, all the other 4 are neutral to incremental. And we're not yet at full steam in all 4. Got it. And then just secondly, just going back to the U. S. Business, obviously, a lot of innovation coming into the portfolio again in 2020. You talked about the obviously the hard seltzers. How do we think about sort of the investment that's good within that U. S. Portfolio that's support all that innovation? Well, let me tell you, Simon, if you don't mind, I will step back and talk about the 5 commercial priorities in the U. S. With numbers, okay, because again, those are metrics. So the first priority is to grow core plus. We went from 6% of total market to 8% in 2 years driven by Michelob Ultra. The second one is to grow super premium. We're flat. So here we can do a better job, but we're flat at 20% of the segment. In premium, we wanted to double, we want to multiply by 10 times our volume and in 2 years we doubled it from we doubled from 2 years ago. Mainstream, that's corn value, we want to stabilize. 2 years ago, we're losing 60 bps, that's corn value. Now we're losing 13 bps. And beyond beer that we were declining 6% 2 years ago, we're now double digit revenue growth. And that is what's causing our net revenue in the U. S. To grow this year 0.5%, EBITDA 1.1%, margin expansion of 28 bps going to 40.8 percent EBITDA margin in a very competitive market. So that is what we're doing. And to support the growth of Yum! Veer, especially seltzer, we are going to commit to 20% increase in investments in the U. S. And that's mostly CapEx, but also some OpEx behind Michelob Ultra Pure Gold, behind Michelob Ultra Modern Brands and behind Telsters in terms of capacity and also in terms of canned wine and canned cocktails. So I mean, all these things are mostly CapEx. And in terms of OpEx, there's a lot of resource reallocation because that's where growth is. Great. That's really helpful. Thank you. Thanks, Sam. Our next question comes from the line of Andrea Pistacchi of Deutsche Bank. Yes. Hi. Thank you. I first have a question for Filipe on the tax rate and then a quick follow-up. So one of the reasons for the higher tax rate guidance is the U. S. Fiscal reform you said and I think the non deductibility of your interest charge. Is there a path over the medium term to reduce the tax rate as you delever the balance sheet? And then, Verito, going slightly deeper on Beyond Beer. In the U. S, you've talked about seltzers. You've just referred in the previous question to canned wine, babe and cut water sort of ready to make cocktails. Can you just talk a little bit more about these, how they're performing, the size of these now? And are we close to the point where these two brands in particular can start to make a more meaningful contribution to the total? Hi, Andre. This is Felipe. On the effective tax rate, the point on U. S. Tax reform is the full implementation of that. I would say the most relevant impact is also coming from the country mix as there has been a significant shift. And this thing is less sensitive to the leverage level. And what happens if you recollect at the very beginning part of the SAB funding was not deductible. So there is room for still for deleveraging and that should help. But I think for 2020, it should stick to the current guidance of 27% to 29%. And on the Beyond Beer, Andrea, let me just recap the Beyond Beer. So big growth driver for the industry. So that's something we have to take advantage, profitable, brings a lot of consumers back incremental. So first, the seltzer, we already spoke about it. 2nd, canned wine and spirits. When we started ZX 5 years ago, one of the missions of ZX was to look at the alcohol adjacencies or other alcohol segments where there were profit pools and volumes that we're not using or poking and go there with some innovative approaches. And that was the canned wine, the canned spirits and now ready drink works as well, our pot based machine for cocktails and beer, which has been around in the U. S. And already commercial in many states, which allow us to gain incremental volume outside of beer category while leveraging our existing capabilities and assets. The other one was to fill the category white space, focusing on brands like kombucha, which is a kombucha with alcohol that have high opportunity to grow in micro trends. Southwest is big on that, but we continue to bet on that because that could be something that connects to health and wellness, very low ABV, something that health and wellness consumers are willing to pay a premium for. And then leveraging the improved performance of our existing brands like the retailers. We're seeing improved brand health and volume trend performance in retailers. And the idea really is to establish this as a business unit and that's what we did in November last year when we established a new Beyond Beer business unit, which allow us to focus on developing this portfolio to meet consumer needs in these different categories and occasions. So we're very committed to Beyond Beer. That's why we announced this investment mainly on seltzer, but not only, but also for canned wine spirits. And we think there was a lot of interesting volume and margins to be captured here. Okay. Thanks. And ladies and gentlemen, we have time for one more question. Our last question comes from the last of Sanjay Ajmal of Credit Suisse. Hey, Brita, Felipe. So you've been talking about category expansion for a couple of years now. It seems like the pace of innovation has stepped up, but it doesn't seem like it's been enough. Is it a risk you're trying to do too much at once and perhaps spreading yourself too thinly and losing focus on the core brands? No, I don't think so, Sanjay, because I mean the teams that are doing this are separate teams. That's why one of the reasons why ZX was put in place. So core is more than 70% of our business. We want to continue to hero the core within our company. But we know that these days is not only about focusing one thing. You have to do N. Again, the category expansion framework gives a good roadway to do that. So we have proven ways of work in core. There's still work to be done, of course, because core has been challenged by many sites from below, from above. But we've been investing core, trying to understand a bit more how brands can be positioned, packaging, promotion activities, new channels, e commerce. So lots of things that for core is very important. So core is also about deliver the current but transform the business, continue to transform such that it continues to remain relevant. And a lot of these are innovations are being done by different size of the business. For example, the premiumization is being done by the high end company. So the high end company is separate from the core organization, right? The flavor and styles are being done by ZX, right? And the smart affordability is being done by the core because they are more connected in terms of packaging, occasion, box and the idea is to the high end company, I mean the high end company grew double digits both top and bottom line. ZX is already 15% of our revenue growth. So I mean, so to your question, you're right, not everybody is doing the same thing. So core is core to get a smart affordability, okay? Then you have high end taking care of premiumization and then you have ZX taking care of 1,000 flavors. So that's pretty much how we are divided to conquer. Just a quick follow-up. It seems like the competitive intensity across the industry has up over the last couple of years. Is that offsetting some of the gains that you're making with category expansion? And what's embedded in your outlook for the competitive environment? Do you expect it to remain just as intense? No, no. I mean, beer has always been competitive. What you see different today is because 2 or 3 companies in the beer business are developing more and more global brands. They start facing each other just like Coke and Pepsi, right? Coke and Pepsi, they are exactly in all the markets facing each other. DEA used to be very local in terms of brands. Now it's going to international, then going to global brands. And as this continues to grow, competitors are going to face each other in many markets at the same time. But because the growth to another market is being done via global brands, that is also very healthy compared to other food and beverage categories where the new entrant comes as a private label. In our business, at least the new entrant comes at the very top, either as a craft or as a global brand and that get consumers to trade up and that's beneficial for the category, beneficial for our players, especially for the leading player in that market. So when somebody comes to our market and starts developing or investing as well in the premium segment, if we don't sleep on the wheel, we're going to be the biggest beneficiary of that segment growing faster, right? So and that's what we want to do as more people invest in seltzer, we want to have a close to fair share and at some point fair share. So as the segment grows, we take our fair share of that growth. Today, we're not there yet. Got it. Thanks. And this was our final your question has not been answered, please feel free to contact the Investor Relations team. I will now turn the floor back over to Carlos Brito for closing remarks. Well, thank you, Maria. And I'd like to do 2 things in disclosing. I'd like to close the business part and then I'd like to close and talk about our 30 year colleague, Philippe, his last conference call. So bear with me a little bit. So in terms of the business in closing, throughout the year, we achieved a more balanced top line growth between volume and revenue per hectoliter growth and made considerable progress toward our optimal capital structure. However, our overall performance was below our expectations. We're a company of owners, but we're never fully satisfied with our results. As I said during the call, we'll learn from some implementations and executions of prices, for example, or some categories that were on the index and we're trying and we're going to fix this very quickly. We're strong diversified company with an unrivaled geographic footprint, portfolio brands and talent pool. We use these learnings from this year to better position ourselves to deliver long term growth. While there are some short term challenges ahead, we're confident in our strategy and plans to grow our business by delivering balanced sustainable top and bottom line growth in 2020 and beyond. So before I conclude, now I want to take a couple of minutes to thank Felipe Dutra, my friend, my partner, our Chief Financial and Technology Officer, will be stepping down after long and distinguished career with our company to pursue new projects. As we announced earlier this year, Philippe's departure will be effective after our annual shareholders meetings on April 29. Since he joined our company in 1999, Felipe has embodied the spirit this is wrong, 1989. Felipe has embodied the spirit of true ownership, has been in the company for 30 years, has been the architect of our company's best in class financial strategy and its contributions to value creation are numerous. Under Felipe's direction, our financial discipline has freed up resources to invest behind the growth of our business. Likewise, he played a key role in the creations of MVAV, MVAV as well as in our landmark combinations with Anheuser Busch, Grupo Modelo and SAB. Over the years, Felipe has developed a strong bench of talent that's now spread across different zones and functions of our company. Fernando Tannenbaum, our Interim Chief Financial and Technology Officer is a great example of this bench. Fernando is a 15 year veteran of the company and presently serves as Vice President of Finance for the company's South American Zone as well as the Chief Financial Officer for our Brazilian subsidiary, Unbabel S. A. He has a deep understanding of our business and international experience developed through several positions in the finance function including treasury, M and A and Investor Relations. He will be part of our senior leadership team and a member of our executive committee. Felipe, we have been honored to have you as our partner over 30 years. And speaking for myself, it has been invaluable having your advice and your friendship. It has been an amazing journey. Wish you the best of luck in your endeavors and success in the next chapter of your life. Thank you very much. And Fernando, welcome. We're excited to have you appointed as our CFO. I look forward to partnering with you to ensure we lead growth through consumer centricity, operational excellence and innovation supported by strong financial discipline. So welcome, Fernando. All right. Well, thank you and we'll see you next quarter. Thank you very much. Thank you for your time.