Earnings Call: Q4 2018

Feb 28, 2019

Welcome to the Anheuser Busch InBev's Full Year 2018 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 click on the Investors tab in the 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 condition 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 20 F filed with the Securities and Exchange Commission on 19th March, 2018. AB Inves assumes no obligation to update or revise any forward looking information provided during the conference call and shall not be liable for any 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, and welcome to our full year 2018 earnings call. Today, I'll be taking you through the results and highlights of this past year. I'd also like to spend some time on our global premiumization strategy, building upon the category expansion framework we introduced to you last year. I will then spend a few minutes on our better world initiatives before handing over to Felipe to discuss our earnings, cash flow, capital allocation and our 2018 reference base. We'll then be happy to take your questions. So let's start with the highlights. 2018 was another step forward in our company's transformational journey. We had many successes to celebrate, though the year was not without its challenges. We achieved strong volume, revenue and market share growth in many important markets led by Mexico, China, Colombia, Western Europe and many African countries, especially Nigeria. We're pleased to see our market share trends in the U. S. Improving, driven by our commercial strategy and focus on premiumization and innovation. This resulted in our best market share trend since 2012. Premiumization continues to be a key focus for our company. And as a result, our high end company grew revenue by double digits. Our global brands had another outstanding year and I'll go into more detail on our premiumization strategy later in this call. ZX Ventures, our growth and innovation group delivered robust revenue results, contributing 10% of our global revenue growth with strong commercial momentum, allowing us to engage with consumers more than ever before. Our global sponsorship of the FIFA World Cup enabled us to execute the biggest and most powerful commercial campaign in our company's history, with Budweiser leading the way as the most talked about brand on digital and social media. The top line growth driven by this commercial initiatives was coupled with solid operating leverage to generate EBITDA growth of 7.9% and margin expansion of more than 100 basis points as we continue to strike a healthy balance between top line results and profitability. And in line with our dream to bring people together for a better world and our culture of stretching ourselves to constantly improve, we launched our 2025 sustainability goals this year, our most ambitious set of goals ever. These are some examples of the many achievements we attained in 2018. However, we faced challenges as well, which impacted our results. Some of our key markets suffered from difficult macroeconomic conditions that put pressure on consumers, particularly Argentina, Brazil and South Africa. Currency volatility, especially weakness in emerging market currencies, negatively impacted our U. S. Dollar cash flow, which slowed our anticipated deleverage path. As a result, we proactively rebased our dividend payout by 50% to accelerate deleveraging in line with our capital allocation priorities. We also faced increases in our cost base, especially with respect to aluminum globally and freight costs in the U. S. In summary, there was a lot to be proud of this year despite the challenges. We are well positioned in emerging markets, which represent more than 70% of our volume and almost 60% of our revenue, setting us up for long term growth despite short term volatility. And as a company of owners, we manage our business for the long term. Our revenues grew by 4.8% in full year 2018 with revenue per hectoliter growth of 4.5% and 4.7% on a constant geographic basis. Total volume grew by 0.3%, owned beer volumes grew by 0.8% despite macroeconomic headwinds across many emerging markets. Non beer volumes declined by 3.6%, largely due to a weaker industry in Brazil. The successful implementation of the market maturity model and the category expansion framework across our businesses contributed to good beer volume performance in many regions this year. We saw strong beer volume growth in Mexico, China, Colombia, Western Europe and Nigeria, along with several other of our African markets, which was partially offset by weaker performances in Brazil and Argentina. Premiumization initiatives were led by our global brand portfolio, which continues to achieve double digit revenue growth outside of the brand's home markets. On the other end of the price ladder, we expanded our portfolio in many markets this year to include more affordable and accessible options for our consumers. These products drive increased beer per capita consumption, take share from informal alcohol and add comparable margins to our core portfolio. A positive top line performance coupled with operating leverage and continued cost discipline across our non working dollars contributed to EBITDA growth of 7.9% and margin expansion of more than 100 basis points despite currency and commodity headwinds. Our net debt to EBITDA ratio was 4.6 times at the end of the year, down from 4.8 times at the end of 2017, despite significant currency headwinds. The leveraging to around 2 times remains our commitment and we will prioritize debt repayment to meet this objective. We expect our net debt to EBITDA ratio to be below 4 times by the end of 2020. As we disclosed during our Q3 results, the Board has proposed a final dividend of €1 per share for fiscal year 2018, bringing the total dividend for the year to €1.80 Let me now tell you more about the results of the quarter. Our revenue in the 4th quarter grew by 5.3% with revenue per hectoliter growth of 4.9% and 4.6% on a constant geographic basis. This growth was led by China, Mexico, Colombia and the U. S. Our global brand portfolio continues to grow faster than our total portfolio with total revenue growth of 9.8% and 12.6% outside of the brand's home market. Solid owned beer volume growth of 1.2% was partially offset by a decline in our non beer business of 4.9% resulting in total volume growth of 0.3%. Our EBITDA growth accelerated in the 4th quarter to 10% with healthy margin expansion of 190 basis points to 43.3%. This was driven by top line growth, cost efficiencies and synergy capture, partially offset by an increase in year over year commodity price. Let me now go into a bit more detail on the performances of some of our larger markets. Additional details on each country's performances can be found in our full year results press release from earlier this morning. In the U. S, we're excited to have delivered an improved share trend, the best since 2012. This was a result of successful premiumization and innovation and in line with the 5 strategic pillars we implemented at the beginning of 2018. We remain focused on building winning brands, leading the trade up, stabilizing the share of segment trend of our core brands, growing the Beyond Beer segment and leading category growth. We're pleased to see both Budweiser and Bud Light improve their share of segment trend in 2018. Mexico had a great year and was the biggest contributing market to both company volume and revenue growth. The success was broad based with growth in every region and across all major brands resulting in a share gain of 60 basis points. Additionally, we have recently reached an agreement with OXXO, Latin America's largest chain of convenience stores. We're always looking for more ways to reach and satisfy consumer preferences and by selling our leading brands in OXXO OXXO's more than 17,000 locations throughout Mexico, we can reach more consumers in more channels and more occasions. Colombia had a very had a solid year as well with top line growth led by our global brand portfolio, which grew by double digits. We continue to capture revenue synergies in Colombia as well as in many other legacy SMB markets through the expansion of our global brand portfolio as we develop the premium segment. Our business in Brazil was under pressure this year given the challenging macroeconomic conditions. As a result, we estimate we lost 40 basis points of market share primarily due to segment mix shift. In light of the difficult environment, consumers traded down to the various segment where we under index. However, we gained share in the growing premium segment mainly due to the success of our global brands. We also launched new affordable innovations such as Nossa and Magnifica to penetrate the value segment without compromising our margins. South Africa had a difficult year as a result of the macroeconomic environment, out of stocks and adverse segment mix shift, as consumers traded up to the premium segment where we under index. We have been focused on increasing our market share in the premium segment and we estimate that we gain approximately 10 percentage points of share in the segment this year. We believe we have the right brands and strategy in place to continue this trend. China delivered a strong performance with balanced top line growth driven by volume and premiumization. Budweiser grew by mid single digits and our super premium portfolio grew significantly supported by increased penetration of the e commerce channel. I would now like to spend some time on our premiumization strategy, which we believe is one of the key levers that will enable our company to continue to deliver balanced top and bottom line growth. As you may recall, during our full year 2017 results call, we introduced you to the category expansion framework. Today, I'd like to focus on one major element of the framework and that is premiumization. Global disposable income has been on the rise in recent years and is expected to nearly double in the next 13 years to more than 40 $1,000,000,000,000 Many industries have benefited from this trend through the growth of the premium segment from mobile phones to coffee to pet food. This trend is true for alcohol as well, though compared to wine and spirits, premium beer is a smaller percentage as you see on Slide 11. The beer category has a significant opportunity to further premiumize similar to other alcohol categories. This trend is healthy for the industry as it increases sales values as well as margin by enhancing mix. To win in the premium segment, it's crucial to have a portfolio of premium brands, especially as markets mature. As you see on Slide 12, the average number of premium beer brands increases exponentially as markets mature. In late stage maturity markets, consumption occasions are more frequent and more diverse due to the fragmented taste profiles of consumers who are also willing to spend more. Taking into account increasingly sophisticated consumer needs and values, we are well positioned to win with our unmatched portfolio premium brands led by our complementary global international and local craft and specialty brands. Our global brands Budweiser, Stella Artois and Corona continue to lead our growth and now represent more than 20% of our total company revenue. In 2018, they grew revenue by 9% and by 13.1% outside of their home markets where they typically command a premium price point. Budweiser had an outstanding year, growing revenue by 10% outside of the U. S, its home country. Much of the success is driven by our biggest and most successful commercial campaign ever during the World Cup, where we use our global sponsorship to elevate the brand and introduce it in many new markets. Budweiser's role in our premium portfolio is to offer consumers a trade off from core beer, especially in early stage maturity markets. It's about high energy, social occasions and it's a flagship premium brand in the party space. Stella Artois also delivered solid performance with revenue growing 5% 2% this year. The growth was driven by a broad group of markets as the brand experienced double digit revenue growth in more than 25 countries. Stella Artois is one of the brands in our portfolio with the richest history, with a brewing heritage in its home country of Belgium dating back to 13/66 and has an important role to play in our portfolio by owning the meal occasion. Corona continued to deliver phenomenal growth this year with global revenue growth of 17.6 percent and off 28.5% outside of its home country of Mexico. This growth was led by China, Colombia, Argentina and Western Europe as well as a very strong performance within Mexico. Corona is our most premium global brand and has a very clear role to play in the portfolio for co add social occasions. Corona currently has a market share of 3% or higher in just 3 countries where we own the brand. With the brand growing double digits globally, we believe it's still far from reaching its full potential. The complementarity 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. As consumer tastes for various styles becomes more sophisticated, craft and specialty brands become more essential for our growth. And as a result, we have enhanced our portfolio across our markets to ensure we're relevant in this exciting and profitable space. We're the number one craft beer brewer in the world with a portfolio of more than 35 craft brands across 30 countries to meet the needs of every consumer occasion. Examples of the success of our craft business are the global expansion of Goose Island with Brewhouse or Brewpub locations now open in Brazil, Canada, China, Mexico, South Korea and the U. K. As well as the growth of our specialties portfolio. In addition to positive recognition from consumers, many of our craft and specialty brands have been widely recognized at beer competitions across the world. Our craft and specialty portfolio won 363 awards in 2018, including 161 gold medals at 15 most prestigious competitions in the world. This is a testament to the quality, heritage and individuality of the brands within our portfolio. It's not enough to have a best in class portfolio. To win in the premium segment, getting these brands to right people in the right places at the right times is equally important. For this reason, we established the high end company, an autonomous business unit with a focused approach to the premium segment. The high end company is currently in 22 countries, which represent roughly 70% of the premium opportunity worldwide. Within these markets, we focus on the top urban centers and target the most premium points of consumptions such as craft beer bars, nightclubs and fine dining restaurants. The high end company is led by senior and experienced owners with a specialized structure that combines the agility and speed of being independent with the scale of our core business. The high end company has established itself as the number one growth engine of our company responsible for 10% of our total revenue, but 30% of our revenue growth. In fact, premiumization represents our single biggest opportunity for growth. We estimate that the premium segment will reach more than 200,000,000 hectoliter by 2020. The segment is expected to grow about 5 times faster than the core value segments and based upon our experience, it's a very profitable segment driving about 2 times more revenue for every hectoliter sold. In summary, the premium segment represents a powerful combination of high growth and high profitability and we're confident that our diversified portfolio of global craft and specialty brands is best positioned to capture this growth. Moving on, I'd like to take you through some of the accomplishments we've made on the path to our dream to bring people together for a better world. As we like to say, sustainability is our business and it is good business. In March 2018, we launched our 2025 sustainability goals, our most ambitious set of commitments 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 the private sector has a responsibility to contribute to the solutions for some of the world's most pressing and complex issues. In 1 year, we've made significant progress including global water partnerships with the WWF and the Nature Conservancy. Additionally, 50% of our purchased electricity volume was renewably contracted and carbon emissions were reduced by 4.5%. We also launched the 100 plus Accelerator, a game changing program dedicated to finding new startups and technologies to solve the world's biggest sustainability challenges. So far, we've launched 21 pilots across 12 countries where we're testing novel solutions emerging in agricultural technology, logistics and packaging. Our brands are championing authentic sustainability causes as consumers are looking to be empowered through everyday choices that make a difference. These initiatives are led by our global brands. Following the launch of the 100 Renewable Electricity symbol at the World Economic Forum in Davos in 2018, Budweiser rolled out the symbol on packaging in the U. S. With more markets close behind. The U. S. Team then took this powerful message to the country's biggest stage, the Super Bowl with a wind power themed ad. By now you're likely familiar with Stella to our partnership with water.org, which began in 2015. This partnership has now provided clean water access to 1,600,000 people to date, partnering not only with co founder Matt Damon, but also with new celebrities like actress Sarah Jessica Parker to drive awareness. Corona continued to lead the way in sustainable packaging becoming the 1st global beer brand to pilot plastic free rings when it's cans in Mexico. Our Dream for Better World prioritizes smart responsible drinking. We believe that promoting smart drinking behavior benefits the communities in which we operate and positions us to lead the category for the long term. More drinking is also good for our business and we have made it a part of our commercial strategy by providing our consumers with more choices within our portfolio. Encourage moderation and leveraging the global trend of health and wellness, we're providing consumers with high quality no and low alcohol beers, which can play an important role in reducing harmful consumption. Our target is that 20% of our beer volumes come from no and low alcohol beer by 2025. Approximately 8% of our global beer volume meets this criteria today. And in 6 markets, no and low alcohol beers make up at least 20% of our beer portfolio volume currently. A key to expanding this piece of our portfolio is innovation to ensure that we have a robust portfolio to meet different consumer needs. As such, we have launched 12 new products this year resulting in 76 brands globally that qualify as no and low alcohol. What makes this segment even more exciting is that these brands often command a premium price point and the margins are typically higher since excise taxes tend to be lower. I now would like to hand it over to Felipe, who will take you through our 2018 earnings cash flow, capital allocation and 2018 reference date. Felipe? Thank you, Brito. Good morning, good afternoon, everyone. Let's start with an update on our synergies. In the Q4, we delivered $217,000,000 of synergies bringing the total for the fiscal year 2018 to just over $800,000,000 and the total synergies captured to date to over $2,900,000,000 Our total synergy guidance remains at $3,200,000,000 which will be delivered by the end of 2019 earlier than we originally anticipated. As a reminder, these synergies do not include any top line or working capital synergies. We continue to expect the synergy capture to require approximately $1,000,000,000 of one off cash costs to be incurred in the 1st 3 years after closing and of which $123,000,000 has been spent to date. Net finance costs in the year were over $6,700,000,000 compared to over $5,800,000,000 in 2017. This increase was entirely due to higher mark to market losses linked to the hedging of our share based payment programs of more than $1,700,000,000 compared to a loss of $291,000,000 in 2017. We saw year over year reductions in most of other items within the net finance costs. Our normalized effective tax rate for the Q4 was 32.9 percent, up slightly from 32.1% in the Q4 2017 and bringing our full year tax rate to 27.8%. Excluding the impact of the gains and losses related to the hedging of our share based payment programs, our ETR this quarter was 25.1% bringing the full year tax rate to 24%. Our effective tax rate guidance for the full year 2019 is between 25% to 27% excluding any gains and losses related to the hedging of our share based payment programs. 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 our share based payment programs and hyperinflation adjustment in Argentina increased by $0.19 from $4.19 to $4.38 The increase was primarily driven by lower net finance costs excluding the impact of the hedging of the share based payment program and higher normalized EBIT partially offset by higher income tax expenses. We also incurred a year over year decrease in the share of results of associates driven by 2 main items. 1st, our shares of associates was abnormally high in 2017 as we were catching up with 20 16 results reported by the Castel Group as discussed during the full year 2017 results conference call. 2nd, in 2018, the share of results of associates was negatively impacted by an approximately 85 percent currency devaluation in Angola, which is an important market for the Castel Group. There were also one off events in the smaller associates. On a normalized run rate, we estimate that income from associates for the past 2 years would have been roughly $200,000,000 each. We closed fiscal year 2018 with $14,700,000,000 of cash flow from operations and EBITDA margin of 40.4 percent and converted 26.8% of our net revenue into cash, well ahead of our peer group. 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. That excludes certain items which management has little or no ability to influence for example payroll related payables. 2018, we reached an average level of negative 13.6 percent of net revenue. This number is an improvement from last year, but remains below our high watermark in 2016 of negative 15.2%. This is primarily driven by SAB consolidation which was at much less efficient level of co working capital as a percentage of net revenue. This remains another area of synergy potential when applying our traditional company cash conversion efficiencies in the combined footprint. I will now spend some time discussing our debt profile. On Slide 32, you will see that our debt maturity profile is well distributed across the next several years as we maintain roughly $16,000,000,000 of liquidity composed of cash and revolving credit facilities. In early 2019, we completed a note offering with a weighted average maturity of 20 years and subsequent tender offer for notes maturing between 2021 and 2026 allowing us to significantly expand our debt maturity profile and eliminate refinancial pressure for the foreseeable future. These transactions extended approximately $14,000,000,000 of debt due between 2021 2026 so that the debt maturing during that timeframe can be repaid with free cash flow while facilitating deleveraging. Our debt portfolio remains insulated from interest rate volatility as 94% of our debt holds at fixed rate. Furthermore, the portfolio is comprised of a diverse mix of currencies, 56% of our debt is denominated in U. S. Dollars, while roughly 35% is linked to euro. We use the euro currency as a proxy for the emerging market basket of currencies that are relevant to our EBITDA and cash flow generation. The euro has a strong correlation with our main emerging market currencies and has the advantage of providing access to bond markets with significantly higher liquidity and lower costs. In order to further balance our currency mix, we have also issued debt in alternative currencies such as British pounds, Canadian dollars and Australian dollars. Following the recent notes offering and tender offer, we extended our weighted average maturity to roughly 14 years and our debt maturity in any given year is considerably lower than our annual cash flow generation. Finally, we expect the average pretax gross debt coupon in full year 2019 to be between 3.75% 4%. Our net debt to EBITDA ratio was 4.6 times at the end of the year, down from 4.8 times at the end of 2017. We expect our net debt to EBITDA ratio to be below 4 times by the end of 2020 and deleveraging to around 2 times remains our commitment and we will privatize debt repayment in order to meet this objective. As you can see from slide 34, our capital location objectives remain unchanged. There is one more item I would like to cover before beginning the Q and A section as we updated our 2018 segment reporting for purposes of results announcements beginning January 1, 2019, which can be found as a reference base on pages 2829 of our press release published earlier this morning. I would like to call your attention to the fact that this reference base incorporates 3 changes. The first is the new regional results presentation as we explained during our Q2 2018. The second is the impact of hyperinflation accounting applied to the 1st and second quarter of 2018 for the Argentina operations as if we had applied hyperinflation accounting as of January 1, 2018. This modifies the 3rd quarter results without impacting the full year reported figures. The 3rd change is the restatement of our results considering IFRS 16 adjustments or lease reporting as if we had applied the new standard as of January 1, 2018 as well. The new standard changes the way that we present our results with an increase in depreciation of $428,000,000 more than offset by a $512,000,000 increase in EBITDA leading to an increase of $84,000,000 in EBIT that broadly offsets the increase in finance costs as per the table on slide 35. It is also important to note that lease liability will be reflected in our net debt beginning in 2019. For reference, at the end of 2018, this number was just under $1,800,000,000 More detail on the changes can be found on Page 1740 of our 2018 financial report. And with that, I will hand it 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 Our first question is coming from Olivier Nicolai of Morgan Stanley. Hi, good morning, Britton, Felipe. Got one question regarding the pace of deleveraging and then one follow-up on the working capital. So regarding the pace of deleveraging, you've indicated in the past that ABI can reduce its net debt to EBITDA by about 0.5 per year, assuming no significant volatility in EM currencies. Is it reasonable on a constant currency basis to assume that it could be the case for 2019? And then regarding Slide 31 on working capital as a percentage of net sales, What are the difficulties that you are facing to bring SAB to the level of ABI? And do you expect this to happen at some point? Thank you. Okay. On the face of deleveraging, so as we said in our outlook that we are committed to be below 4 by 2020 and coming from 4.6 that very much implies a pace that is in sync of what we said, which is what we believe can be achieved under normal circumstances. So we are fully committed to that number. On the core working capital, we have some impact here in terms of zone mix as well as the timing of certain changes. There is no reason why we should not expect the former SAB territory to get to similar or comparable levels to former ABI and therefore coming back to our path of continuous improvement as from the high watermark achieved in 2016. Thank you very much. Our next question comes from the line of Trevor Stirling of Bernstein. Hi, Felipe and Brito. Two questions from my side. The first one, Brito, in Colombia, I gather the there's a new entrance and the brewery has opened. I was wondering if there are any early indications yet about what the commercial strategy might be or what the impact could be on the beer market in Colombia? And the second question, I don't expect you to comment directly on this, but there were press reports about a potential listing of the Asian operations. I'm sure you won't comment directly on that particular story. But do you think that's a possibility that there are bits of the organization that could be partially listed? And what would be the logic behind that? Hi, Trevor. So on the first question, I mean, Colombia, I mean, it's all very new. Yes, it is true that we'll have CCC that build a brewery. We have local production. Some of their brands are already present in Colombia. That's important to say because they've been importing brands now for many years, like global brands on their side and some other U. S. Value brands. So but there will be local production. What I can saw and it's too early, there's nothing really to report at this point. But what I can say is that ABI, we have a very solid position in Colombia. We have a very strong portfolio core and premium brands in those two segments. We continue to grow and invest in Colombia by serving consumers and our parks, developing our brands. Last year, for example, we renewed VBI for Aguila and that contributed in a huge way for the quality perception of the brand, bringing to life the easy drinking aspects of this brand. And it is also true that the Colombian market has shown loyalty to our brands, given the long time we have been present in the market. And again, we're very committed to Colombia, it's one of our top 5 markets. So and if you look at the results for this year, we have very good momentum. So Colombia had a very positive revenue growth in the full year by 8.4%, out of which 3.2% was volume, 5% was revenue per hectoliter and the beer category importantly enough expanded. So we gained share within total ALCO in Colombia. And so this is all very positive news. And we continue to drive premiumization. So our global rent portfolio grew by more than 75% last year 2018 in Colombia led by Budweiser. And our local brand portfolio continues to do very well including Club Colombia, which is a local premium. Trevor, on the rumors about Asia IPO, of course, we cannot speculate on that. If we ever consider such a thing, I think the merits are more in terms of creating a platform for future M and A, establishing a local champion. Yes, that could potentially help deleveraging too. But given the pace of deleveraging at the current liquidity levels that would never be the main rationale for such a thing. Thank you very much, gentlemen. You're welcome. Our next question comes from the line of Robert Ottenstein of Evercore ISI. Great. Thank you very much. Two questions. So Brito, great presentation on the premiumization strategy. And I just want to push on that a little bit. Historically, your strength has been more in the mainstream. I think you recognize with the high end company that you need somewhat different skill sets and perhaps different incentives to maximize the value of your global brands there. And you've done a very good job obviously in Europe and China. How would you rate where you are in other regions of the world to be able to execute the premiumization strategy? Are you there yet? Are there certain skills that you need to develop and capabilities? So that's question for you, Brito. And then Felipe, kind of follow-up on the last question. If you had the ability to buy Castel, would you be able to finance it? How would you look to finance it? Thank you. So Robert on the first question, I think what said about the high end company, it's not something of a foreign concept, unknown concept to us. When you look at ZX, we did the same thing. So we took some things that we thought could be grown in a much faster fashion and decided to dedicate a group for those things like e commerce, specialty brands, brand experiences, brewpubs. On soft drinks, you might remember many, many years ago, we did the same. We created a separate business unit in the company. We did the same now with the Hyatt company some years ago in recognizing the premiumization trend around the world in all sorts of maturity levels, level markets. And so we decided to form this business unit that today's presence in 22 markets. And I think a good proxy, it would be hard for me to rate where it stands, but I think a good proxy for where it stands and what it's doing for us is the global brand performance. I think global brands are really an integral part of what the high end company does, but also the craft and the specialty brands. If you look at all the 3 sets of brands, I mean, it's growing. And the high end company also reflects our view that the game today to be played given where consumers are in occasions and the way they're fragmenting is a portfolio game. So we believe the global brands should be tackled with the portfolio brands, not one brand, maybe 3 or 4 that craft, the craft opportunity around the world should be tackled with the portfolio brands, the same for specialties. And the high end company is a group of very experienced owners that are really driving and exchanging best practice on how to best accomplish and dealing with this assortment in terms of quality distribution, quality execution and really making sure our packaging and our execution really worth the premium price it commands. So I think the high end ZX soft drinks unit, all proof points of when we decide to get people focused on something, they develop a skill set and a good proxy for it would be to continue to see the growth of our global brand specialty craft brands. And again, the global the high end company today represents 30%, represented 30% of our net revenue growth for total ABI last year. So I think that's a good proxy for what it's doing. And again, when you look at our global brands, look at Corona, for example, in places where we own the brand, only 3 markets, we have more than 3% share of total Most markets, we have less than half a share point share of total beer. But for me, it says that we still have tons of things to do with Corona, with Budweiser and with Tele. So again, very bullish on that in the high end being the vehicle to make it happen in the marketplace. So on the Castel side, Robert, we are really focused in bringing our relationship to the next level, exchanging best practices, making our portfolio of global brands available for the Castile territory as a way to face competition as there is this premiumization trend in many markets getting to know each other better. And if we ever reach the conclusion that our business should get together, there are many ways of structuring that. Thank you. Our next question comes from the line of Iman Ferry of Exane BNP. Hi, guys. Two questions from my end. The first one is you're pointing to, I think the word used is strong revenue and EBITDA growth for FY 2019. Just wondering if you could give us a bit of help on what strong means? And second question on volumes, noted that you want a better balance within your top line growth more volume. Be good to know how you exactly plan to do that, what regions, what strategy will price mix be sacrificed, etcetera? Thanks. Well, I don't want to sound cute, but I mean strong really means strong. It's something that you write home about. So I think that's the best way to define this. Other than that, I'll be giving explicit guidance and we're giving a qualifier given things we've seen in some markets and I'll give you some examples. So for example, first time in the Q4, we saw some acceleration, we saw some momentum building towards end of the year in general in our business. So that's already a good start for 2019. Then if you go country by country, I mean, look at the U. S. In the U. S, we had a 40 bps decline in market share, but in the second in the last quarter of the year, we had a 20 bps. And in December, the results was much better than that. So I mean, you see some sort of acceleration in terms of our strategy working. Now go to Brazil, our 2nd biggest country. We had an important election. And if you look at Brazil last year, I think there were 2 years in one. The 1st year was before the election with the trucker strike and the whole thing about the very acrimonious environment with the election leading up to the election. Consumers are not very happy with the front page of the papers every day and the confidence was low. After the confidence of consumers went up. People are optimistic and you saw a much better end of the year. For example, in our case, our volumes are still negative, but we grew share. So we were performing better than the industry. Then you go to Mexico. Mexico had an amazing year last year, so very strong growth. And on top of that, now we're going to be beginning on April 1, we're going to be selling within an important set of stores from OXXO, which is the most important convenience store in Mexico and for that matter in Latin America with 18,000 stores. We're going to be selling around Guadalajara in Mexico City, which are very important markets for us with very high share. And this used to be 100% products from our competitors. So again, on top of a very strong momentum, you add beginning April in a phased approach, you add OXXO on top of it. And on March 4, we're going to be officially inaugurating next week, our new brewery in the center region. So we're going to be able to supply that we have capacity. Then you look at Africa, I mean Nigeria, now that we have capacity, I mean we're growing and continue to grow very fast. Then you look at Western Europe, we had an amazing year last year. Asia, same thing, had momentum towards the end of the year. Going back to Brazil, we're also now finally activating more the value segment with prop things we learned in Africa with local cereals in the Northeast. So we're growing our participation on a segment that is segment that we had very low share. So I mean and if you look at our outlook, what we're saying in general is that we want to achieve a better balance between revenue and volume that our revenue per annuity should be above inflation, that our cost, cost of sales and SG and A should be below inflation, therefore, EBITDA growth. So I think that's at this point what we're willing to say about 2019. But with the strong Q4. And again, we're applying the category expansion framework across the business. So we've been very consistent on how we assess our brands, our portfolio, trends where consumers are going and resource allocation to match where consumers are going to be landing 3 years, 5 years down the road. So again, we are excited with our plans for 2019, yes. Okay. Thanks. Thank you. Our next question comes from the line of James Edward Jones of RBC. Yes. Hello, guys. Given the currency fluctuations in your hedging policy, is there anything material we should be aware of for the margin President of Brazil a couple of years ago. Well, there is no margin outlook. Margin is not part of our outlook. We refer to the strong top line and EBITDA growth. What is embedded in our outlook is the impact in cost of goods sold. And there are two references in there, cost of goods sold and SG and A should be below inflation and cost of goods sold by sales should be in the mid single digits territory despite the significant pressures in both FX and commodity prices. But Filipe, I mean, a couple of years ago, obviously, there was that shock, which people weren't expecting when margins in Brazil in the 3rd quarter, I think, were way below expectations. And is there can you give us any sort of steering whether there's going to be something similar happening again this year? Well, I appreciate the point, but our outlook refers to ABI consolidated and we do not break down particular references per country. Although in the MBEV press release you can read that there is an expectation for cost of sales per hectoliter to be in the mid teens and that's a combination of commodities and FX. And despite the cost pressure and based on a more balanced top line growth, it is also expected EBITDA to grow faster than 2018, but no references for margins there. And if I could compliment, James, I think your question referred to 2016. I think 2016. So in 2016, the big surprise we had in Brazil was really the taxes at both federal and mainly state levels that really was something that was really hard to pass into prices and we had to absorb that during the year on top of the COGS increase. So I think that was the big difference. This year, 2019, yes, there will be pressures on the COGS. But for now, there will be no tax. We don't see any tax increase or anything. And in 2016, let's remember, we had the Kirin situation in which the company was being sold and was very promotional in the market that added to the whole situation and made the pass through very hard. So I think we're in a different world now. That's very helpful. Thank you. You're welcome. Our next question comes from the line of Andrea Pistacchi of Deutsche Bank. Yes. Hi, Brito. Hi, Felipe. I have two questions, please. The first one on your COGS outlook, mid single digit per hectoliter now. With aluminum prices that have been coming down quite a lot since May last year and obviously substantially in the second substantially in the second half? And the second question please on Brazil. I appreciate there's probably not much you can say about current trading, but with the consumer confidence improvement that we're seeing, would you say this is starting to feed into better beer volume growth for the industry in Brazil? And would you be optimistic that this year you can at least the industry can grow volume in Brazil? Well, the first question on COGS, Felipe, you want to take this one? Yes. Well, we see very much across the board. I just want to not break down specifically for quarter. Yes, I think that is no indication of that. Yes, we stay with our guidance for total company, right? Yes. Yes. On your second question, Andrea, I think let me step back and talk a little bit about how we prepare. I mean, you're right. I mean, you read a lot of things about consumer confidence, about macro getting better. These are all public information. But I think more important than that, I think our guys in Brazil use the year 2018 to really make they made some transformational investments in our portfolio in Brazil with innovation in liquids and packaging preparing for time when Brazil would really reignite in terms of consumer confidence and spending. So for example, our plan 2018 or now plan for 2019 that was supported by things we did in 2018 is that we have now robust and unique portfolio that will allow us to play in all segments of the Brazilian beer market. So not only we are now in super premium that we've always been in core, but now we have initiatives, strong initiatives on the value segment as well. So that's something that was not there before, now it's in place. Our distribution continues to increase throughout the country. For 2 years ago, we identified areas of the country that for different reasons were being underserviced and that will continue to increase the distribution in some rural areas. Another one is we have some exciting innovations that are in the pipeline, things that we launched at the beginning of January like Skol Pure Malt and things that we're still bringing to the rest of the country like Skol Hops and other initiatives like new packs for our premium brands, global brands and things of the sort. And also we have commercial investments that target to improve consumer experience that were also seated during the year 2018, betting that 2019 could see an increasing confidence in consumers. And when that happens, we think we stand to benefit from any improved consumer environment. Okay. Thank you. Our next question comes from the line of Somin Hales of Citi. Thank you. Hi, Brito. Hi, Felipe. A couple of questions. I wonder, Brito, if I could come back to your comments around Mexico and firstly around the OXXO opportunity you've got there. Can you tell us a little bit about how the penetration will build over the next sort of 3 to 4 years into that OXXO, not 17,000 strong OXXO channel? Clearly, some of those markets opening up in April, but how do we think about that build over the next sort of couple of years? And just generally related to that and Mexico more broadly, how you're thinking about the wider premiumization opportunity in that market? And then secondly, just as a broader question, I was interested to see recently another acquisition that you made into the spirits industry in the U. S. How is your thinking evolving there with regards to the broader alcoholic beverage segments? Okay, Simon. So first question OXXO. Again, very exciting to be now beginning on April 1, part of the OXXO chain. They've been expanding 1,000 plus stores per year. We are the number one convenience chain operator in Mexico and in Latin America, a chain which we had no sales up until this point. So we're going to be introducing our products in a sequence fashion throughout December 2022. And let's be clear, there was no other way to do it. I mean, with this amount of stores and the amount of sales that we are counting on, we would have to prepare in terms of production, logistics and coincidence or not, we are inaugurating our new brewery next week in Central and with additional capacity. So we're going to be ready with capacity, but we also need to be ready in terms of service levels, depots, so we can start this partnership on the right foot. The good thing is that we're starting this partnership a year prior to the existing contract ending, which would be only next year. And yes, we're doing it in a phased approach, but starting a year before, because we'd have to be in the phased approach anyway. You don't all of a sudden go to 18,000 stores overnight. You have to build that. But the good thing is that we're starting in regions that are very important to us, right. And that's the Mexico City area, which is a huge area where most of the consumption in Mexico is and we over index big time in our share. So we're going to enter a channel in a region where we over index our national share big time and in the Guadalajara region as well, which is important to us. So again, we're very happy. We think our consumers deserve that. Now they're going to be able to find their preferred brands in that channel as well. And again, it's going to be in a phased approach. There would be no other way to do it. Premium segment in Mexico, there is everything to be done. It's still very low compared to the total beer market. And we have the brands to do it and we're doing it with Stella, with Michelob Ultra and now with some crafts as well. So and OXXO will help us do that as well because they're also interested in that trend. So very happy to be now a partner beginning April 1. In terms of the acquisition we did of Cutwater out of San Diego, California in the U. S. This belongs to pertains to an idea of ZX. And the idea of ZX is that when we enter established categories other than beer, we try to do it from a disruptive angle. So if we're entering spirits in a more serious way, we don't want to enter trying to do a me too type brand, big brand, national brand. We're entering with a craft mindset. Same thing we did with wine, with Babe in the U. S, the same thing we did with a small acquisition that's going very fast in the UK, which is called Masters Distillers, which is all about people crafting their own more beverage, their own whiskey, scotch and then having that batch for them. I mean, all these things are ways to try to enter established profitable categories with a different spin than what incumbents have currently. So Cutwater belongs in that kind of broader framework. Got it. Thank you, Britney. Thanks, Hassan. Our next question comes from the line of Richard Withkin of Kepler Cheuvreux. Yes. Good afternoon. Thanks for the question. I have 2. First of all, on Mexico, on the new brewery, could I assume that the 12,000,000 hectoliters becomes available immediately? And also perhaps you can comment on what impact the brewery will have on efficiency in your total Mexican brewing infrastructure? And then the second question that I had was on CapEx. In 2018, you spent slightly more than your guidance. Did you pull forward some projects? Or what's going on there? So in Mexico, Cardio Brewery as with new any new brewery you do in a phased approach, so you do Phase 1, Phase 2, Phase 3. I'm not sure we're willing to give all the numbers for all different phases for competitive reasons, But it's a brewery that was needed capacity that was needed not only for the domestic market, but also for export markets. So very happy to be able now to open it up next week in Mexico. In terms of CapEx? Yes, we net CapEx for 2018 was about €4,600,000,000 and we are looking to a range of $4,000,000,000 to $4,500,000,000 for 2019. Yes. All right. Thanks. Thank you. Our next question comes from the line of Sanjay Aujla of Credit Suisse. Hi, guys. A couple of questions, please. One technical one. When you're talking about inflation in your outlook, what inflation are you what inflation rate are you assuming? And I've got a follow-up after that. The weighted average CPI for the markets we operate, which is based on economies forecast is between 4% to 4.5%. Got it. And then just a follow-up on the soft drinks performance, continues to be quite a drag. Clearly, there's some reorganization taking place there. But can you just talk a little bit about some of the initiatives and to what extent do you expect performance to improve in 2019? Well, I think if you look at SoftBank, the main drag in our performance last year was Brazil. I mean, it is a more elastic category. And when consumers are under pressure, They will buy less soft drinks before they buy less beer. So soft drinks tend to suffer more than beer in tough economic times. And it's also true that consumers within soft drinks in Brazil, they traded down. And to to segments in which our brands are not very prevalent, not very present and that is on returnable packaging and more cheaper B brands and local brands. So that's not the way we build our business. So those would be two reasons. I think, elasticity, consumers feeling pressured and trading down to segments in which our presence is very small. Got it. And just on Argentina specifically, I think your volume performance deteriorated there in Q4. Can you just talk a little bit about the media outlook? Are you seeing any signs of stabilization? Or do you still expect it to be quite challenging? No, I think what happened in Argentina last year is that the economists and the government, they forecasted at the beginning of the year an inflation that was around 25% or so and at the end it was more than 45%. So throughout the year given the cost pressure and everything we had to continue to correct prices every 2 months towards the end of the year and that of course put us at a big disadvantage, give that competition had a different way of looking at things. And so we believe that for next year that situation could be a bit more streamlined. But again, in Argentina, what I have to say is that we're very excited for our Budweiser back. We're going to reposition the brand to where it belongs in a way it was being fully managed. That's one of the reasons why we were excited about getting the brands back. We continue to gain share of throats. Beer category continues to do well despite everything because other categories are more negative than beer. Premium portfolio was stellar to our corona Patagonia, local premium continues to perform very well. And we have also launched new affordable packs for humans and Brahma to offer consumers some more accessible options during this tough times on the macro side. And last but not least, we launched also Andes Orihime from Mendoza province. Mendoza is very famous for wine. That's why we launched Andes in that region because we want to compete with for that new location by offering not only the regular Andres but also different liquid and styles, so people can pair with food in an easy way. So it's doing very well. We feel so in 2018 in tough economic times in Argentina, what we did was again make sure our portfolio is ready when things would normalize a bit. But what really disturbed our business to your question Argentina last year was the frequency and the amount of price increases we have to implement towards the end of the year every 2 months or less given the acceleration of inflation, which people think again this year will be a bit less of a problem. It will still be high, but not as high. Thank you. Thank you. Our next question comes from the line of Carlos Savoy of HSBC. Yes. Good morning, everyone. Frito, you've spoken at length about liquid differentiation and about with your core brands in every market and about having differentiated occasions like you just did. Are you comfortable in Brazil with your mainstream liquid differentiation? Is there opportunities still there? And can you comment on the line extensions in Brazil? You mentioned Skol Pure Malt and how differentiated are its occasions and how you avoid cannibalization with it? Well, that's a good point. I mean in Brazil what we saw in the last few years is that pure malt emerged as the new segment. And as always, we utilize portfolio approach because again consumers go to different occasions, they require different taste, different profiles, different styles. And in 2016, for example, we launched 3 varieties of Brahma Extra, right, which is a pure malt line extension of Brahma. Then from Brahma Extra, we went to Skol. In the Q2 last year, we had Skol Hops that was an innovative beer line extension for Skol with aromatic hops, very light, fresh, flavorful, inspired by IPA, but an easy drinking IPA, right? And Skol Hops grew to be almost the size of Brahma Extra. So demonstrating how powerful the Skol brand is. And then based on that, now on January 2, we launched Skol Pure Malt, which is a pure malt beer, but using an innovative brewing process, which makes it very easy drinking even being a pure malt option. So these two brands Skol Hops and Skol Pure Malt, these two line extensions that are saying are really being beneficial and will continue to be the Skol mother brand since they give Skol more brewing credentials reinforces Skol innovative DNA as an easy drinking liquid, but also as an innovative brand. So we believe that the portfolio approach has been starting to work well for Skol. We also have done lots with Brahma. Brahma is very healthy, growing very fast. And we also did a lot on expanding our portfolio in a profitable way to more affordable liquids. So we took the idea from Africa. We had not much happening in terms of our brands in the value segment. And with the Africa idea of local cereals, we went state by state in the Northeast and North and depending on the states also in the Western side of Brazil, depending on the cereal that was grown in that state and there's a different, we proposed a local recipe with a local name that's relevant for consumers in that state. And I'd say very surprised by the acceptance at a lower price point, but with very good margins, the same we did in Africa with we learned from our new colleagues. So again, that's what we're doing in Brazil. So again, preparing Brazil always for the time after the elections when consumers will feel better and this time seems to be here. At least that's what we read in the paper. Thank you. Thank you. Our next question comes from the line of Caroline Levy of Macquarie. Good morning. Thank you very much. A couple of questions. Just the A and M was down substantially in the Q4, if I read that correctly. And was that all to do with the way your spending ran in a very high in the second quarter on World Cup? And do you expect to raise A and M in line with sales growth next year? Like it will be plenty spent is the question. And then just secondly, you talked about having very good margins on the high end company above the core margins. Can I just clarify that that's at the bottom line? It's not a gross level and it's despite the fact that there must be less operating leverage when you're growing small brands versus driving volume growth on a Bud Light for example? Thanks. Hi, Caroline. I think it's interesting. Let's go first for the A and M for the quarter. We always say that to follow A and M quarter by quarter, it's not the best way to do it. You're right. Last year, we had the World Cup, which concentrate a lot of investments around Q2, Q3. So of course, that's not a normal year. So I would look at the total year. That's precisely I mean, you answered the question. And the second one, on A and M for next year, I don't recall exactly what the question was. Just are you planning to spend at a similar percent of sales? Like will you support your brands aggressively again? Yes. We'll continue to support our brands. Of course, we're not going to give any guidance on A and M because that's competitive sensitive, but we'll continue to support. It's our number one priority in terms of capital allocation is to support our organic business and only then deleverage. So we'll continue to support it. And if Brazil if consumers feel better, as I said to Carlos in the question before, we have a portfolio that we invested a lot in 2018 that's ready to take advantage of any growth in consumer confidence we see in the market. So we feel that if the growth is coming back to the B industry in Brazil and this is not a guidance, I'm just saying if that's the scenario, we feel we're best positioned to take advantage of it. And then I just asked about margins on the high end company at EBIT level. Yes. Sorry. Yes, yes, you're right. So you had 3 questions there. On the high end company, I think the beautiful thing about the high end company is that it does the whole operation on a focused basis, but at the end it takes advantage of the scale of the core company. So I think that's the magic of it. We have 2 magics there. First, when we take for example, craft brands and we get craft brands that we that are partnering with us and we have them to access our supply organization and our procurement organization, the costs are much more streamlined than they were when they were an independent company. The product is the same, It's just that we buy and produce at a much better cost. And the distribution is done in a much better way. So yes, those brands require more investment. But on the other hand, even for global brands, once they start going and scaling, they not only take advantage more and more of our machine, but they also start paying back a lot of these investments. So for sure, it's margin accretive. I'm not saying, for example, if I'm introducing Budweiser in Nigeria, of course, I mean, for the 1st 2 years or so, I am investing ahead of the curve, but that's an exception. In most places, our global brands have been there now for a couple of years and they are at scale. When you look at the total of our global brands, they can grow much faster, but they are already, let's say, they have already some critical mass and they are accretive. Thank you. Thank you. Our next question comes from the line of Edward Mundy of Jefferies. Afternoon, everyone. Two questions, please. Nigeria, first of all, that's been a huge success for you. Other than just improving the amount of capacity you have, what is it about being a challenger that market that's enabling you to gain so much share? And then the second question is around your low and node strategy, the ambitious targets by 2025. How important is it to really get low alcohol beer or 0 alcohol beer growing within the U. S. As part of that? With the you mean the U. S? Yes, within the U. S. Okay. Sorry, I missed the last part. Well, Nigeria has been an amazing story. I mean, Nigeria, our colleagues, new colleagues had done already a very good work in terms of base. They identified some consumer insights given that in Nigeria you have some different consumer groups in different regions of the country. They match that with some brands we had and but they had capacity constraints. And when we came on board, one of the first decisions we made was to really invest in a new brewery in Nigeria and also to fix some bottlenecks in Onitsha and Port Harcourt, these are existing breweries. And then once we had capacity then was just all upside. And on top of that last year with the World Cup, we introduced Budweiser, which is an amazing success in Nigeria. Nigeria, Nigerian consumer, they are very open to American brands, very open not only to beer, but American brands in general. And Budweiser is the true American in the bottle, right? I mean, from sports to music to just the imagery of the U. S. That it projects to the iconic brand. I mean it's really very powerful brand and a growing premium segment. So there is everything to be done on the premium segment in Nigeria. You go to Lagos, you see that consumers are looking for ways to express their middle class to express that they yes, we can buy more expensive stuff. And the demographics in Nigeria are very compelling, right? Lots of young people, young adults and the pyramid is very favorable for the next many years. So we see lots of opportunities. We have big momentum. We have a great team, great leadership. And yes, consumers love our brands. And now we are in Lagos because now we have capacity. Before we're only in the interior of the country. And yes, it's very good market, very excited, very committed to it. And in terms of low and low alcohol beers, we said for many years now that we see a big opportunity because when you look at health and wellness and when you look at how eclectic beer is, beer can go all the way to 0. And we decided to approach the no and no alcohol beer as we do with the global brands, for example, in a portfolio approach way. So we believe that for global brands, the way to really do it is through a portfolio approach, not with 1 brand, because consumers have more and more occasions, as soon as they used to more and more assortment, more and more choices. So we built a portfolio of global brands that appeal to different needs, different occasions and are complementary and doing very well. And we're using the same strategy, the portfolio approach to the no and no alcohol beer. We believe that it's about different brands. So today I'm here in Belgium, taking this call from Belgium and we have Whole Garden 0 with different flavors. We have less than 0 and we have Jupiler 0. And that's exactly what consumers want because these brands are different, they offer different profiles in terms of liquid styles and consumers want to have that option not only in one brand, but also in a portfolio of brands. So we believe that beer can do that. And 8% of our volume today is already in that segment of 3.5% ABV all the way to 0. And we want to get that to 20%, very profitable and very in line with some trends we see out there of health and wellness in moderation. So again, very happy with our portfolio, the way it's developed and growing. Thank you. And Priti, just on the loan. I mean, in Europe, I mean, you mentioned that you're in Belgium. You're seeing that the beer category getting boosted by 0 alcohol beer. I mean, do you see a similar opportunity within the U. S. For this category to develop? Yes. I think the U. S. Where we're now testing Budweiser 0 in some markets that we tested in Canada went very well. So we're testing now in the U. S. And we'll see. I mean, I think for sure the U. S. Will also follow that trend. Low alcohol is also an interesting opportunity around the world. So it's not only about non alcohol, but also low alcohol beer. So but yes, U. S. Is part of our plan for sure. Great. Thank you. Thank you. Our next question comes from the line of Mitch Collett of Goldman Sachs. Hello. I've got a question on South Africa. Can you just confirm that the supply disruption from Q3 is over? And I appreciate it's a very challenging macroeconomic environment. But if I look at 4Q versus the 9 months, your volume growth is better, your pricing is weaker and your margin contracted quite a lot in the Q4. I think it was down 300 basis points in the release. Can you perhaps comment on what's driving the shape of that growth? And then one completely unrelated follow-up. And I appreciate you're not going to guide by the quarter, but last year you got off to a pretty slow start, which you highlighted on the 4Q call. Would it be wrong to assume that the shape of this year will be opposite way around? Thank you. Well, as you said, Mitch, out of stocks was a problem for us in South Africa together with the macroeconomics. In the Q4, we saw better numbers in terms of volumes because the out of stocks was in a better situation. The problem of margins going down has to do with increased supply chain cost because to alleviate the out of stock, we had to bring beers from different points in the country. So the beer average mileage increased because it's also peak period, end of the year summer. So that's something that we see as a one off, but it was there in the Q4. But we thought it was better to incur those costs and have products in a peak time. So out of stocks are pretty much solved with the exception of some very specific products that have a different production process that we're still solving some bottlenecks. But in preparing of course when the summer kind of tames down now in February, March, then we have April with Easter, which is for South Africa very important season. So we don't want to we want to be totally ready for that season. So does that mean the margin contraction from Q4 could continue into 1Q until you get to the low season and then obviously next year you probably will have fixed it? No. What I said in Q4, I'm not giving guidance for the next quarter. What I said for Q4 is that there was a supply constraint in the Q4 that I had to bring beers from afar because premium brands are growing very fast and that's not yet available everywhere. So I had to bring it from afar. So the mileage that I per hectoliter increased, so it was not optimized, but we've decided to do that as opposed to lose sales in a peak period. So that's why the volume was better, but at a higher cost. But I would see that at least for the year 2018 as a one off. And but again, no guidance here. The guidance we have for cost is at a company wide global basis, not for market. Yes. Thank you, Mitch. And then the shape of this year given last year got off to a relatively slow start. Would it be fair to assume at the group level that this year could be the other way around? Well, again, we're not giving guidance at this point. It is true that the second quarter, especially last year, volumes contracted big time. That's all public. But at this point, at this time, we also have phases in Calvin with Easter and all that price increases, so many things. But at this time, we're not giving guidance in terms of phasing of comps for 2019 in South Africa. Okay, understood. Thank you. Thanks. Thank you, Mitch. And ladies and gentlemen, we have time for one more question. Our final question will come from the line of Nick Oliver of UBS. Hey, thanks guys for the question. Just one final one for me. In Brazil, you mentioned market share being down 40 bps for the year. Could you remind us just where share is overall in that market? And how important is it for you to get back to the previous share levels? Or is it more just about maximizing profitable growth? Thanks very much. Yes, Nick, one thing to be said to paint the total picture is that in 2017, we gained 60 bps of share and then in 20 18, we lost 40 bps of share. So just to give the total picture. And at this point, we're not like in the U. S, we're not giving the base for share number because the sources are moving and these are company estimates. So for now, we're like we do in the U. S, we give the deltas, but not necessarily the base because these are company estimates. Okay. That's it. Very clear. Thanks guys. Thank you, Nick. And that was our final question. I would like to turn the floor back over to Brito for any closing remarks. All right. Well, thank you, Maria. Thank you everybody for your time. In summary, 2018 was another step forward in our company's transformational journey. We had many successes to celebrate, though we faced some headwinds too. Our focus this year was to continue to drive the organic growth of our business while deleveraging towards our optimal capital structure. Today, we are a stronger, more diversified company applying our learnings across our global business. While there's always more work to be done, we're confident in our strategy to deliver balanced, sustainable top and bottom line growth in 2019 and beyond. Thank you for joining the call today and enjoy the rest of your day. Thank you. Thank you. This concludes today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.