Earnings Call: Q4 2017

Mar 1, 2018

Welcome to the Anheuser Busch InBev's Full Year 2017 Earnings Conference Call and Webcast. Hosting the call today from AB InBev are Mr. Carlos Brito, Chief Executive Officer and Mr. Sarita Goudra, Chief Financial and Technology Officer. To access the slides accompanying today's call, please visit AB InBev's website now at www dotab inbev.com and click on the Investors tab in the Reports and Filings 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 annual report on Form 20 F filed with the Securities and Exchange Commission on the 22nd March, 2017. ABN though 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, and welcome to our full year 2017 earnings call. Today, I'll be taking you through the results and highlights of our 1st full year as a combined company following the combination with SAB. I'd like to spend some time on our enhanced global footprint and brand portfolio, then introduce you to our category expansion framework that we have adopted from SAB and implemented across all markets this year. This is one of the intellectual synergies resulting from the combination and something we believe will enable us to grow the global beer category. I'll then spend a few minutes on our better world initiatives. Finally, Filipe will discuss our earnings, cash flow and capital allocation. As a result, we'll spend more time discussing our strategy going forward and we'll not go into all of the details of our regional performances. We therefore encourage you to refer to the press release we published earlier this morning and we'll be happy to answer any questions on our markets during the Q and A portion of today's call. 2017 was a landmark year for our company. Not only did we deliver our best results in the last 3 years, but we are well on our way to achieving our most successful business integration ever, following the combination with SAB. The strong performances came from all around the globe with revenue growth in 9 out of our top 10 markets. Of note, Mexico delivered high single digit revenue growth with sales growth coming from both our core and premium brand portfolios through impactful brand executions. Additionally, Europe delivered top line growth for the 4th straight year with Western Europe growing revenue by high single digits as a result of leveraging our premium brands. Our Global Brands revenue was up by 9.8%. We saw highly successful scale ups of our global brand portfolio in our new markets, especially Colombia, Peru, Ecuador, South Africa and Australia. Our passion for brewing was evident in the 191 awards we won around the world this year, making us the most awarded brewer at major international beer competitions. We continue to focus on creating the highest quality beers to meet consumer needs across a wide variety of occasions. Our EBITDA grew by double digits, thanks to our top line growth and enhanced by synergy capture in markets including Africa, Latin America and Australia as well as healthy margin expansion in China. While we delivered solid results in 2017, this is only the beginning of our combined company's journey for the next 100 years and beyond. For the 5 years ended 2017, our revenue CAGR of 4.6% exceeded that of all our global FMCG peers. The structural change in our global footprint resulting from the combination with SAB positions us towards higher growth markets as evidenced by the accelerated momentum in 2017 with revenue growth of 5.1%. In full year 2017, we accelerated our revenue growth with top line up by 5.1%. Revenue per hectoliter grew by 5.1% as well, both on organic and constant geographic basis. Our global brands grew revenue by almost 10%, which I'll discuss in more detail shortly. We experienced volume growth of 0.2% as a result of beer volume growth of 0.6%, which was partially offset by a decline in our non beer volume of 3.1%. Especially strong volumes are recorded in Argentina with beer volumes growing by double digits and soft drinks achieving the best result in more than 6 years, as well as Africa outside of South Africa, which grew on beer volumes in the mid teens. EBITDA grew by 13.4% with margin expansion of 288 bps to 39.1%. The U. S. Was a strong contributor to EBITDA this year with growth of 1.9% and margin expansion of 159 bps to 41.2%. Additionally, the U. S. Gross profit margin expanded for the 8th straight year, growing 66 bps to 61.4%. Normalized earnings per share percent. Normalized earnings per share increased by 42.8 percent on a reported basis to $4.04 from $2.83 mainly driven by a higher profit. Lastly, the Board has proposed a final dividend of €2 per share for fiscal year 2017, bringing the total dividend for the year to €2.60 in line with the prior year. We finished the year with an especially strong 4th quarter, growing revenue by 8.2% with revenue per hectoliter growth of 6.6% and 6.7% on a constant geographic basis. All 6 of our regions contributed by growing revenue. Our global brands had their best quarter of the year with revenue up by 17.8%. Total volumes grew 1.6%, driven by beer volume growth of 2.3%, though our non beer volumes declined by 3.6%. EBITDA for the quarter was up by more than 20% with margin expansion of 4 46 bps to 42.4 percent and our normalized earnings per share grew by 141.9% on a reported basis. In Brazil, we rebounded in the second half, growing EBITDA by 20.4% after declining 19.7% in the first half of the year. Following the combination with SAB, we have increased our exposure to emerging markets that are positioned for accelerated future growth. Emerging markets now contribute to more than 70% of our volumes and almost 60% of our revenue. As you see on Slide 9, the geographic diversity provides us with a natural hedge against geopolitical volatility in any given market. In other words, we're not overly exposed nor dependent on any single market. Additionally, this mix will likely evolve over time as a consequence of varying growth rates among the markets. Our broad geographic footprint is enhanced by our portfolio of over 500 global, international and local brands, which provide a wide selection for our consumers around the world addressing their needs across a variety of occasions. This past year, we were recognized for having 7 of the top 10 most valuable beer brands in the world by Brand Z, which provides us with the best in class portfolio to scale across our markets. 3 of those 7 brands make up our global brand portfolio, Budweiser, Stella Artois and Corona. The home markets for each brand are the U. S. For Budweiser, Belgium for Stella Artois and Mexico for Corona. Outside of their home markets, the global brands capture higher revenue per hectoliter as well as higher margins. They're also growing faster outside of their home markets with revenue up 16.8% in 2017. This past year, our 3 global brands contributed to more than 17% of our total beer volumes and almost 20% of our total beer revenue. More than half of both the volume and revenue contribution comes from outside of their home markets. In total, including the home markets, revenues of our global brands grew by 9.8%, well ahead of the growth of our total portfolio. Each brand accelerated its growth rate versus 2016. Budweiser revenues grew by 4.1%, extending its lead as the number one beer brand in next domestic sales volume. The growth was driven by strong performances in China, Brazil and the UK. Stella Artois revenue grew by 12.8% with solid performances in Argentina, the U. S. And Australia. The brand continued its partnership with water.org and Matt Damon this year, providing 1,000,000 people with access to clean water. Corona led the way as revenue grew by 19.9%, driven by Mexico, China, Australia and Colombia. The brand's global image is enhanced through platforms such as its partnership with the World Surf League and the Corona Sunsets Music Festivals, of which over 7,000 were executed in 2017. These results are underpinned and fueled by consistent global messaging and market activation. We believe this portfolio of complementary brands has a strength to be marketed worldwide, capitalizing on common values and experiences that appeal to consumers across borders. I'd now like to introduce you to the category expansion framework. The category expansion framework was created at SAB before the combination with intention to grow the global beer category for the long term. We believe that the insights derived will enable our company to achieve further growth across our diverse geographic footprint at different levels of maturity. Beer is the number one alcohol beverage category in the world by volume as well as penetration. The advantage of beer are many, including that it's the beverage of moderation as well as that is the most accessible and inclusive. The global beer category continues to grow in volume and value. However, volume growth is accelerating in recent years, driven primarily by mature developed markets. We understand why the category faces challenges as traditional beer occasions become less prevalent when markets mature and consumers have an increasingly wide variety of beverage choices for different occasions. We also understand where there are growth opportunities, not just in emerging markets, but in mature markets as well. As markets evolve, the severe occasions evolve too, moving from primarily male dominated socializing in the on premise to more in home mixed gender occasions and consumption with meals. To address consumer preference across occasions, this framework defines our strategy to grow the global beer category as well as provide us with insights to grow our share of beer. This best practice excited our management teams around the world has since been fully integrated into our global strategy and was used to frame our current 3 year plan. This is a great example of how we combine the best of both by bringing together category level thinking and global execution. This framework incorporates our 4 commercial priorities. It positions us to develop our global strategy to ensure we are both bringing new consumers into the beer category as well as offering our existing consumers new opportunities to engage with a wide range of product offerings for new and different occasions. The framework considers the maturity of a market using a host of different variables, for example, disposable income. Different markets around the world can be then segmented into groups where growth trends are similar. This facilitates the transfer of learnings between comparable markets, allowing us to leverage our global scale and manage a complex geographic footprint. It also helps to structure portfolios that are designed to capture future growth given emerging trends. This is not a quick fix. We still need to build brands based on consumer sites and segmented channel management as we always have. However, we're very excited by new common language for all of our markets. It has made us far more strategic about how and where to invest behind our brands. Would now like to take a few minutes to explain it in a bit more detail. At the center of the category expansion framework lies core lager, the heart of our business. In many of our markets, both developed and emerging, our largest brand is a local core lager. Therefore, it's important that we defend this part of the beer category. We have began segmenting our core lagers in 2 types, easy drinking lagers and classic lagers. Easy drinking lagers tend to be a lighter liquid that is tailored to more easygoing, mixed gender occasions. Classic lagers are more full bodied and positioned for more traditional beer occasions such as sporting events. By differentiating between these two types of core lagers, we're able to reduce cannibalization and strengthen the positioning of our brands. For example, in Argentina, we have taken bold moves strengthen the portfolio by differentiating between Killis, a classic lager and Brahma, an easy drinking lager, resulting in the successful improvement of both brands in 2017. In many emerging markets, a large percentage of alcohol consumed is illegal and illicit alcohol. This is often the consequence of lack of affordable options for consumers with limited disposable income. This represents an opportunity for us to provide consumers with affordable high quality branded alternatives. Some of our businesses in Africa have achieved this by pioneering the use of local crops to create new beer brands at appealing price points with healthy margins. We look forward to potential opportunities to further scale these learnings. On the other side of the price spectrum, there exists an opportunity in both emerging and developed markets for premiumization as many consumers are trading up for more high end beers in a wide variety of locations. With our portfolio of complementary global brands, we're well positioned for this trend. Furthermore, we recently launched our high end company, a business unit made up of our global, specialty and craft brands. It is now establishing 22 markets of ours that account for approximately 70% of the high end opportunity worldwide. Our specialized teams are dedicated to accelerating our growth rate with revenue of $4,600,000,000 in 20.17 and almost 26% growth versus 2016. In addition to offering consumers a variety of options across many price points, a further way to grow the category is through flavored beer. Like easy drinking lagers, flavored beer provides an option for mixed gender occasions as well as entering new occasions that have historically been owned by other alcohol beverage categories. We have seen success with many of our brands in this segment in both emerging and developed markets. In South Africa, Fly Fish grew volumes by more than 60% by recruiting females and younger LDA consumers into the beer category and taking share from cider. In Western Europe, our innovation Cubonisto, a rum flavored premium beer, grew top line by more than 40% this year by successfully competing against spirits in the nightlife occasion. In addition to flavored beer, other beer styles beyond lagers allows us to compete in a wider set of occasions. 1 of the biggest opportunities for this is in the meal occasion, where our craft portfolio as well as our international brands enable us to engage consumers through beer and food parents. Leveraging this in many of our mature markets, such as in France with Flasse, which has become the number one beer brand by penetration in that country. We continue to invest in the global craft and high end space to offer more choice of beer styles across our footprint. The category expansion frameworks defines different portfolio priorities for each market based on the maturity of the market. For instance, in emerging markets, there is a bigger focus on classic lagers and affordable brands as we are 1st and foremost trying to introduce more consumers to the beer category. In developed markets, the emphasis lies on broadening the set of occasions in which beer has a role to play. Going forward, we'll be discussing this strategy in more detail and look forward to sharing our plans and results. We're excited about the opportunities coming from this intellectual synergy and the possibilities it opens for future growth. I'd now like to move on to our initiatives that fuel our dream to bring people together for a better world. Sustainability is not just related to our business, it is our business. Brewing our beers is reliant on a healthy natural environment. Therefore, this past year, we're committed to securing 100% of our purchased electricity from renewable sources across our global operations by 2025. This is an ambitious goal, but it's an important one that aligns very well with our dream. We also leverage our brands to promote sustainable initiatives such as Corona's new partnership with Polay for the Oceans to protect 100 islands by 2020 and Stella Artois' continued campaign with water.org to bring clean water to people in the developing world. Part of our dream for a better world is aspiring to make every experience with beer a positive one. Through our global smart drinking goals launched in 2015, we aim to reduce the harmful use of alcohol and foster culture of smart drinking and road safety globally. The AB InBev Foundation was established to support us in achieving these goals. We have also expanded our offerings of no and low alcohol beer products around the world to provide consumers with added choices in more occasions in line with our commitment to have no and low alcohol beers represent 20% of our global beer volumes by 2025. Global operations in more than 50 countries were dedicated to improving the lives in the communities of which we are a part, as well as supporting the farmers and small retailers in our value chain to help them be more productive. In 2017, we donated almost 3,000,000 cans of water to areas affected by natural disasters in the U. S. And donated the proceeds from 3,000,000 limited edition corona camps to people impacted by the severe earthquakes in Mexico. In summary, we're focused on conserving natural resources, promoting smart drinking road safety and supporting our communities. In 2017, we reached all of our previous sustainability goals, which expired at the end of this past year. Later this month, we'll be announcing our 2025 sustainability goals. These goals will focus on 4 areas: agricultural development, energy and carbon, water stewardship and packaging, and we look forward to sharing them with you soon. I'd now like to hand over to Felipe, who will take you through our 2017 earnings, cash flow and capital allocation. Felipe? Thank you, Brito, and good morning, good afternoon, everyone. Let's start with an update on the synergies. In the 4th quarter, delivered $381,000,000 of synergies, bringing the total for fiscal year 2017 to just over $1,300,000,000 and the total synergies captured to date to over $2,100,000,000 Our total synergy guidance remains at $3,200,000,000 to be delivered within the 4 year period following the close of the combination. This number is inclusive of the $1,050,000,000 of cost savings previously identified by SAB. 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 $588,000,000 has been spent to date. Net finance costs in the year were over $5,800,000,000 compared to over $5,200,000,000 in 2016. This increase was driven primarily by the interest expenses on the legacy debt of SAB, the annualization of the bonds issued in 2016 to fund for the combination with SAB as well as currency and other hedging results. The increase was partially offset by lower mark to market losses linked to the hedging of our share based payment programs of $291,000,000 compared to a loss of $384,000,000 in 2016. Our normalized effective tax rate for the 4th quarter was 32 point 1%, up from 28.6% in the Q4 of 2016, resulting from higher profit and the timing of certain deductions during the year. In 2017, our normalized effective tax rate was 22.9% as compared to 20.9% in 2016. I would also like to update you on the impact of the recent U. S. Tax reform legislation. With over 18,000 U. S. Employees and significant tax payments in the U. S. Since 2009, we are proud to be the leading employer and taxpayer in the country. Believe a tax reform bill that lowers the corporate tax rate and incentivizes domestic investments to benefit American workers. We are hopeful that this tax reform will support innovation and growth in the economy. In terms of impact on the company's taxes, during the Q4, we recognized a one off cash or non cash gain will be cash in the future, but non cash gain of $1,800,000 which is primarily driven by the remeasurement of deferred tax liabilities resulting from the reduction in the U. S. Statutory corporate tax rate from 35% to 21%. As we complete our analysis of this new legislation, it is possible that we will make adjustments to this provisional amount. As of 2018, we do not expect to see a benefit of the lower U. S. Corporate tax rate in our effective tax rate as the U. S. Tax reform introduces a broader tax base and new limitations on certain business transactions, which offset the impact of the reduced rate. For the group, the effective tax rate guidance for the full year 2018 in the range of 24% to 26%, which again excludes the impact of any future gains and losses related to the hedging of our share based payment programs. Moving on now to the earnings per share. Normalized earnings per increased by 42.8 percent from $2.83 in 2016 to $4.04 in 2017. This was largely driven by a $2.66 increase in normalized EBITDA, thanks to the organic growth and benefiting from earnings of the retained SAP business and partially offset by an increase in income tax expense and dilution due to the increased number of shares. We closed fiscal year 2017 with $15,400,000,000 of cash flow from operations and EBITDA margin of 39.1 percent and converting 27.3% of our net revenue into cash, well ahead of our peer group in all three dimensions. Moving to core working capital, another important dimension for cash flow generation. Our 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 2017, we reached an average level of negative 13.4 percent of net revenue. The decline recorded in 2017 was a direct revenue. This is 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 34, you see that our debt maturities profile is well distributed across the next several years. A strong cash flow generation provides us with sufficient cushion to repay or refinance outstanding debt without being dependent on capital market transactions to meet our short term funding needs. In addition, we maintained over $20,000,000,000 of liquidity composed of cash and revolving credit lines as shown on this slide. The weighted average coupon of our debt is 3.7% with a weighted average tenure of slightly more than 10 years. 93% of our debt portfolio is locked into fixed interest rates, reducing our exposure to market volatility. 58% of our debt is denominated in U. S. Dollars, while roughly 32% is linked to the 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 been issuing more debt in alternative currencies such as the Canadian dollar, Australian dollar and the British amount. Moving now to our dividend. The Board is proposing subject to shareholders approval a final dividend of €2 per share, which combined with the interim dividend of €1.6 per share paid towards the end of last year will lead to a total dividend payment for fiscal year 2017 of €3.6 per share. As you can see from Slide 36, we have maintained a dividend payment at the same level as the last 2 years inconsistent with our commitment to deleveraging. Expected dividend payment dates for each of our listings are shown on Page 19 of our press release. Our net debt to EBITDA ratio decreased from 5.5 times on a reported basis in 2016 to 4.8 times in 2017 or 4.7 times when adjusted for the closing of pending disposals and for the foreign exchange time mismatch between the balance sheet and the P and L translation. And we are tracking in line with our internal leverage targets. Our optimal capital structure remains a net debt to EBITDA ratio of around 2x and our capital allocation objectives remain unchanged. Our first priority for the use of cash will always be to invest behind our brands and to take full advantage of the organic growth opportunities in our business. The leveraging to around 2 times remains our commitment and we will prioritize debt repayment in order to meet this objective. M and A remains our core competency and we will always be ready to look at opportunities when and if they arise subject to our strict financial discipline and the leveraging commitment. Our goal is for dividends to be a growing flow over time consistent with the non cyclical nature of our business. However, as we have said before, given our emphasis on deleveraging, dividend growth is expected to be modest in the short term. And with that, I will hand back to Maria to begin the Q and A section. 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 comes from the line of Edward Mundy of Jefferies. Morning, afternoon everyone. I've got one question and one follow-up. I think in your opening remarks, you flagged that the emerging markets are positioned for accelerated future growth. Are you able to provide a whistle stop tour of the key emerging market regions and your degree of confidence and acceleration in 2018? I mean, I think the comment was much more again, this is the 1st year 2017 was the 1st year of our combined company. And the idea is that we gave you in that opening a little bit of our split between emerging markets and more mature markets. And in our view, I mean, we come we came we all come from emerging markets, and we know it's volatile at times, but it provides lots of growth and opportunity for value creation. So and if you go to our outlook, we also say that while recognized volatility, as I said before, we expect to continue to deliver strong revenue and EBITDA growth in fiscal year 'eighteen driven by our performance, I mean, our portfolio footprint and our commercial plans. So I mean, this is all tied together. We're very happy with the footprint we have. And this footprint, as said before, is one that should deliver growth ahead of our CAGR of 5 years as we shared with you today. For example, this year, it already did. It's more diversified and less dependent on any one single market. That was the message. Very clear. Thank you. And the follow-up is more of a philosophical question, and I really appreciate the discussion on the category expansion model. You've seen that Doctor. Pepper Snapple and Keurig are taking a less silent approach to their business by combining both hot and cold non alcoholic drinks. Because you think about the market through a consumer lens based on consumer needs rather than a traditional manufacturer led approach, largely based on beer. Is there not more logic in combining beer and spirits together over the medium term as you think about the next 100 years? Well, at this point, we see lots of opportunities that were unveiled to us by this model. And we're really surprised that every time we go to adjacencies with beer or with near beer, we tend to do well. I mean, if you look at our styles that go more to food occasions, for example, or consumers that want a different experience, they are doing very well, growing ahead of our average portfolio. If you go to the left side, flavored beer, we don't have many examples, but the few we have are doing very well. And so we feel that affordability with what we learned with our new colleagues. So I mean, premiumization everywhere. And in Core Largo, the heart of our business. So I mean, if you look at all those points, I mean, there's so much more beer can accomplish. It's just a question of instead of fighting just for share of beer, of steering the category in directions and occasions where beer can play a role and start planting seeds today that could be part of the portfolio of the future as trends evolve and consumers change. Great. Thank you. Our next question comes from the line of Robert Ottenstein of Evercore. Great. Thank you very much. Just a few related questions on the global brands. There's been some controversy on the relative profitability. And you mentioned they had higher margins, but could you be specific? Are you talking about gross margin or EBITDA margin in terms of the global brands in their out of home markets? And then related to that, Corona doing extremely well, A rough sense of how many markets that I know this you may not have the precise number, but a rough sense of how many markets Corona is growing double digit and you think can have a meaningful presence? And then as a follow on, just some more details about the high end company that you discussed in terms of the structure of that company? Thank you. Welcome. Okay. So first, profitability, I mean, that's an easy one. I mean, these high end brands, be it global brands or craft brands or specialty brands, they have way higher margins than our average margins after even after sales and marketing investments. You can see that in many ways. You can see that because of our mix effect has been growing year after year. Even in the U. S, you can see that. You can see that in our outlook with signal that we expect our revenue per hectoliter to grow ahead of inflation, and that's not because of rate. That's because of the fact that mix is becoming more and more important in our net revenue per hectoliter. So at the end, it's all about dollars per hectoliter when it's all said and done. So net net, it's a great business. And that's why, Robert, we decided to invest in your other question in the high end company because it deserves a special group of people that are trained, that have a special profile to make, of course, use of what the mother company offers, but being very focused on these brands that sell maybe lesser volume, they have a more qualified distribution, but have amazing margins and amazing potential. And they travel well, they have global platforms and we have a portfolio of brands, not only 1 or 2, we have a portfolio of brands that are complementary. And the most important things, among other things, is that these brands enter new occasions. So when you look at Corona or Coronita and how well it does with women, with different occasions where beer normally wouldn't enter, When you look at stale in the meal occasion, when you look at Budweiser in sports in the Americana in the bottle that travels so well like any American brands. So it is very profitable when it's all said and done, so much so that we decided to specialize people in the company to do just that. And in terms of corona, I think I said that in calls before, these are all public numbers. If you look at corona in most of our markets, it represents less than one share of total market in terms of beer. On the other hand, you have markets of ours in which Corona is already 2% to 6% of share of total market. So you can only run some numbers. And Corona is our higher priced beer from our global brands, so amazing margins and growing amazingly well in places like China, growing 39% outside of Mexico. Sun in, it's all good store and global brand with an amazing profitability. Thank you very much. Welcome. Our next question comes from the line of Olivier Nicolai of Morgan Stanley. Hi, good morning, Guido, Felipe. Just first question for Felipe. You have refinanced some bonds at the beginning of the year at a much more favorable interest rate. Now looking at the next 2 years, a few of your U. S. Dollar bonds with higher interest will reach maturity. And I was just wondering if you are confident that the 3.7% average interest rate that you gave for the group is going to stay beyond 2018. And just a follow-up on the net working capital chart, where I think it was showing your net working capital at minus 13. Should we assume a bigger contribution on your cash flow from working capital in 2018 versus 2017, considering that you have still probably some synergies to do on the SAB market and that your sales are obviously going to grow? First one was repairing bonds. So on the bond market, we expect a coupon rate of around 3.7 percent kind of around 3.7 percent. You have to be mindful about the outstanding debt, which is at this point, around $104,000,000,000 As we recycle and retire and amortize and pay, depending on the decision to repay or refinance and given the fact that it's primarily fixed interest rates, there may have some room for this coupon to go down, but depending on what happens to interest rates in the future. But I do not expect a material swing, for example, in 2018 in terms of the weighted average, 2.b, around the 3.7%. On the core working capital, this slide shows that from the former ABI side, we have been improving net core working capital as a percentage of net revenues by 1, sometimes 2 percentage points. Year over year, this trend continues. And when you see the decline of the 15.2% to 13.4%, you should expect former ABI to continue to improve. And then as we added former SAB at lowtomidsingledigitsnegative co working capital represented total revenues. So that is the 13.4%. From that point, we expect the combined company to continue to expand. We expect to do faster on the former SAB side. There is no reason why former SAB should not come to similar levels of former ABI. I'm not detailing here market by market, but overall, I see us both similar comparable companies down. And therefore, our working capital should be an area of relevant contribution for the overall cash flow. And the beauty of being the negative territory is the more we grow revenues, more cash it generates, right? And we extract from that. So that should continue to be an important cash flow contribution going forward. Thank you very much and congrats on your results. Thank you. Our next question comes from the line of Tristan Vansteen of Redburn Partners. Good afternoon, guys. You had two questions or question and a follow on. Just first on your dividend, can you talk about a growing flow of dividends? Can you just confirm that it's in euros? And would you consider a scrip dividend or it's just cash? And just to follow-up on, I guess, on both the high end and the category framework, I mean, you're really looking at a longer timeframe, 3 to 10 years to build brands and portfolios. How does that work with your 0 based budgeting framework? I mean, do you have to change that a bit? Do you ring fence money year over year? Just how you think about that going forward? Tristan, let me take the first one on your question. We've always been a company of and not or. So I mean, we're used to do top line and be efficient in cost. So much so that we have a term we use inside the company called cost, connect, win, which says let's be efficient on cost so we can connect with more consumers, so we can win more business. And that's exactly one of the charts we showed in which we compare ourselves to other companies, FMCG. And if you put those two charts together, you see that we have a better EBITDA margin and we have a higher top line growth. So I think those things show that over a period of time, 5 years, we can accomplish both. We can be efficient while having best in class and generate cash. So I think that's what we try to do as a company. At the end, I don't see any conflict, quite the opposite. When you say about building brands for 10 years, let's not forget that when I talk about portfolio of today and portfolio of the future, sometimes it's about developing one brand of today that can be bigger tomorrow. It's not all about new brands. It's about getting resource allocation done in a different way. So you can get a brand that's growing and accelerate the growth. So most of it is about brands that exist either in that market or brands that are global or international that can be introduced in that market. It's not about all creating new brands that will take 10 years to perform. And on the first question Yes, let me pick it up on the dividend, please. We have to look at both at the end of the day. So most of our cash flow generation is in U. S. Dollars. We report in U. S. Dollars. At the same time, we are a Belgian based company primarily listed in Belgium. Share price quoted trading in euros, and therefore, it is a legal requirement to declare dividend in euros, pay in euros. So we have to think of both and at the end what makes more sense for the company in terms of capital allocation, the leveraging commitments and so on and so forth. So in this end, there is a big bit of a dispatch in terms of FX rates between euros and dollars. We'll have to review what makes sense again. But for now, the 3.6% is something that fits within our commitments. Okay. All right. So thanks guys. Just one brief one, maybe just to follow-up and just maybe pass a bit esoteric. But in the same way in ZX Ventures, you have different incentive systems for these guys and they're much more softer targets rather than hard KPIs, I guess. Is the same applicable for your high end unit or the guys in charge really changing the categories because there's a much more longer time frame rather than just hard numbers? Do you measure them differently? Yes, sure. I mean the incentive system is very similar, but the KPIs are different. Because as I said, I mean, when you're building high end brands, the distribution has to be qualified, the execution has to be premium, right? The pricing discipline has to be 100%. The global platforms and execution have to be very well coordinated on global brands, for example. The specialty brands are developed through brewpubs and different experiences. So it's a different kind of activation in the marketplace, but we can measure with KPIs the same way we measure for the core business and we can use the same incentive system just based on different KPIs. Okay. Thank you very much. Thanks, Chris. Our next question comes from the line of Simon Hales of Citi. Yes, thank you. Afternoon, Brito and Felipe. A couple of questions. And the first one really just around we think about your cost base, particularly input costs around 2018. I appreciate there's obviously FX transactional moves impacting. But that aside, Can you talk about maybe some of the big moving headwinds or tailwinds you may be seeing? And specifically, in that regard with regards to the U. S, a number of your FMCG peers have been flagging a tightening of trucking capacity of late. Is that something that you're seeing? And is it having any impact on your business and thoughts there? And then secondly, Brito, with regards to your comments around low and no alcohol, you're clearly on track for your 20% by 2025. How should we think about the build towards that? I mean, how much of your business is already in that low and alcohol segment? And how rapidly should we expect it to grow over the next couple of years? Yes. I'll tackle the second question first. Today, we are around 8% of our portfolio. We want to get to 20% by 2025. So we're not starting from 0, quite the opposite. The big thing that will accelerate this, in my view, is 2 things. First, the category expansion model because it's showing us that there are opportunities in adjacencies and easy drinking and flavor liquids that we can explore. And the second one is that now we already have 5 of our main countries in which Nabla or non alcohol beer and low alcohol beer represents more than 20% and in some even 30%, right? And what we see is that these products come even with higher margin if done correctly. So I think this is going to be a big motivation for our people because they're going to be inspired. They can visit those countries. They can see how it was done. There is a toolkit to be shared with other countries. And again, so we're not starting from 0. The margins are very interesting. And category expansion show us the way on how to use some of those products to land in new categories or new occasions. And we have already 5 countries that are already beyond 20% beyond 20% 30%. And on the first question on costs, I mean, we have here in our outlook in terms of overall performance, we say that where is the cost piece here? Oh, yes. We say premiumization revenue management initiatives towards the end of the first paragraph, while keeping costs below inflation. So here, we try to answer your question with this outlook part of the outlook for the total company, not for any market specific, saying that we'll continue to manage cost below inflation. Okay. Thank you for that. And can you comment specifically at all around that trucking capacity issue in the U. S. That others have been talking about? Yes. There is some trucking capacity issues in the U. S. The economy, of course, is heated. But because we have some inventory and some flexibility, we can avoid peak times, and we know what the peak times are. At the end of the month, while the company is shipping things or big events for e commerce like Black Friday and things like that, that for beer doesn't make any sense. I mean, we can work around those holidays and work around those peak times that were generated by e commerce and try to manage that. But you're right, there is some pressure there in terms of trucking. It's also true that a lot of companies are buying more trucks in response to that. So like any market, price goes up, more people come in. This pressure, of course, is not new. It started already in the second half of last year and should continue during the first half. So there'll be some cycling, but there's already some of it in the base. Our next question comes from the line of Trevor Stirling of Bernstein. Hi, Britta, it's Felipe. Two questions on my side, please. Britta, in the Q4, there was a significant acceleration in revenue per hectoliter in LatAm North, in Mexico, in Asia Pacific. Could you give us a bit more color on what actually lay behind that? Was it easy comps? And how exactly were you achieving that acceleration? And the second question, perhaps more for Felipe. Looking at the associates, Felipe, that rose significantly in the quarter to a bit over $200,000,000 Is that the new norm that we should be expecting, plus or minus? Or are there some one offs in there? Trevor, Brito here. I'll tackle the first one. I mean, I think what you're saying is net revenue per quarter in the Q4, right, compared to the rest of the year? Correct. So for example, if you look at North America, let's take the U. S, which is 90% of the zone. I mean, Q1, our net revenue per hectoliter increased by 2.2%, Q2, 0.9%, Q3, 0.9% and Q4, 2.1%. So for an average of the year, 1.5%. So yes, but you see that it's not only Q4. There is some ups and downs depending on price increases, on mix of shipments, on many things. So you see it started at 2.2, went down to 0.9, came back to 2.1%. So I consider that normal course of business. Latin American West, I'm seeing here 9.5% for the 4th quarter for a full year of around 6, I think, or 9 months or 4.9%. So that was mainly revenue management in Colombia. In Colombia, as we flagged through the whole year, revenues I mean, volumes were slightly negative. The consumers had a VAT increase of 15% on the overall economy. So our guys tried with some discounts to move volume. When they saw it was not happening, they kind of rethought their discount strategy. So that, I would say was mostly of what happened in the Q4. In loan, it was really easy comps on the Q4. If you remember, in 2016 or maybe you don't remember, but in 2016, the net revenue for hectoliter was negative in the 4th quarter by 4.6% negative. So the 10% should be viewed in that context. And then the other zones, I don't see yes, and then in APAC, there was the repatriation of corona that impacted the 3rd and especially the 4th quarter in APAC in Australia mainly. So those are the big things that could explain those variations. Very helpful. Thank you, Prashant. Hi, Trevor. Let me take the share of associates. First, kind of spender here that the share of associates as well as minorities are 2 lines that are not normalized. It's really as reported. And secondly, there is no reference base. For example, when you compare full year 2017 versus 2016, in the 2016, we only have 3 months of dose, which should not impact the comparisons for the quarter. The comparison for the quarter is impacted by year over year is impacted by basically 2 things. First, at the very beginning of the integration, some of the profits recognition in the Q4 'sixteen shifted into the Q1 'seventeen, causing the first or the Q4 2016 to be, let's say, abnormally low. In addition to that, we do a lot of the accruals based on estimates and there is a true up towards year end, which caused the Q4 2016 to recognize incremental profits that were incurred throughout the year. So when you compare Q4 year over year, you have this big mismatch. Thank you very much, Felipe. You're welcome. Our next question comes from the line of Brett Cooper of Consumer Edge Research. Hello? Hi, Brent. Can you hear me? Yes. Hi, Brent. Hi. I was wondering if we could get a little bit more specific on the category framework. And if we take a look at the U. S, right, I mean, you've been trying to expand your portfolio in flavored beers. You've been doing premiumization and that's obviously going well. You've been expanding styles, but it's been unable to drive growth in that market. And I'm just trying to figure out what changes going forward versus what we've seen over the last several years as you apply this framework to your business? Well, and then, Brad, we've seen that in other markets, right? I mean, look at Australia. When Australia decided to shift resources or to start accelerating some brands, it does take a while for things to compensate because some big things and the other ones are small. So the big things are declining, the smaller things are growing. And it takes a while for one to grow to size to compensate for the other. But the direction is set. So we think some of our brands in the U. S. Will remain very important in our portfolio, but albeit at a lower size, at a smaller size. And some others will continue to grow and will be more of a bigger brand within our portfolio. That happens all the times in all markets. If you look at Brazil, same happened. If you look at Argentina, the same happened, in which at some point a brand declines, another brand grows and the portfolio. The important thing is that it should be margin accretive, right? And that's what we've been trying to do in the U. S. Our balance in the U. S. Has always been to stabilize or to have both right at the end, share stabilization and profitability. So if you look at our gross profit margin in the U. S, now for 8 years in a row has gone up. And if you look at our portfolio in the U. S, we've been trying to rejig it, trying to add new things that we think are engine growth engine for the future. And I think we're now with the category expansion framework and with the new leadership in the U. S, I think we're now at a very important point to really start making all those things kind of connect the dots. Not going to happen overnight, but we're brewers for 600 years. So we're here for long term, and we'll do what's best for long term. You have to remember that the share issue we have in the U. S. Was created by ourselves. When we came to the U. S, we said, we like the share position, not the share composition. It's too much based on low macro brands, low profitability brands. We don't think that creates a great business for the future. We're here for the long term. We're willing to take the pain to reject this portfolio. It is true that's taking a bit longer than we thought. But again, the direction has been set from the very beginning. We've learned along the way, adjusted here and there, but the direction is pretty much set. And that is we want to develop bottom of the light and above. And that's the direction where we're headed. Interestingly enough, if you look at the 1st 10 years or 9 years in the U. S, our financial performance has been way ahead of our plan. EBITDA almost doubled, cash flow more than 3 times, volume was below what our plan was. And now for the 2nd 10 years, I think we have a great base to start connecting these dots and like we did in Western Europe, where for many years we couldn't grow. Last 4 years, Western Europe has been growing top line and bottom line consistently 4 years in a row. Now we have the same thing in Australia. And now and this all serves as inspirations and reasons to believe that we can do the same thing in the U. S. If you look at the U. S, I mean, Michelob Ultra is already 10% of our business and it's the fastest growing brand now for 3 years in a row, almost 12 quarters in a row, the biggest share gainer in the U. S. And if you look at the big share gainer brands in the U. S, out of the 6 brands, we have 3, which is Michelob Ultra according to IRI. Michelob Ultra, Stella Artois and Baraes. So I mean, we have brands that are growing. We have, of course, to do a better job on Bud Light specifically and continue to accelerate like we did in the Q4, the brands that are growing. And if you look at our Q4, our share performance was better than our Q2 and Q3, and that was across the board. Not only the brands that are growing accelerated, but the brands that were declining declined less. That's why we went back to 55 bps share loss as opposed to 80 bps share loss. So again, it's 1 quarter, but we've been learning a lot and applying those lines in the marketplace. Great. Thanks. And if I can add one follow-up. I mean, is there a reason why there is why we've seen less of the known low alcohol beer in the U. S. As opposed to other markets, especially in light of, as you mentioned, volume struggle that you've had here? It's a good point. I think we have our plate full in the U. S. We've been testing some other things in other markets, so it's not to distract them. But of course, our guys in the U. S, but of course, with the learnings, you can be sure that some of those things will be migrating to the U. S. Pretty soon. Great. Thank you. Thank you, Brad. Our next question comes from the line of Komal Dillon with JPMorgan. Hi, good afternoon, good morning. And just two questions, please. 1 on the global brands, the slide on that growth of those brands was very helpful. But could you comment on the underlying volume growth rates on these brands ex home markets? I mean, excluding the one offs from taking distribution back in house like Corona and Australia. And then just a follow-up on that working capital synergies question, please. So you're expecting to take former SAB to former ABI levels for core working cap to sales. But is the current lack of cash flow synergies from the SAP deal so far due to difficulties in changing terms with suppliers in Africa? Just could you give us some more color on what is going on in the 1st 15 months of integration, please? So on the I come out, it's Felipe. On the co working capital side, we have been progressing across the SEB territory. And as I said before, there was a I think a question on that one. We see no reason why former SAB shouldn't get to similar levels of former ABI, quite frankly. And that is where we are heading to. And the 1st 15 months, that was not an exception. Well, Kamal, I think your first question was let me see if I understood it correctly. You want to know what global brands are having, what kind of growth they had in their home markets, right? Yes, in volume terms, please. And ex distribution taking back distribution in house like Corona and Australia. So just underlying what could we expect in the future? Yes. I mean, what I know I don't have an exact number in front of me, but what I know is that Stella Clutch is back to growth in Belgium. What I know is that Corona is growing in Mexico, and Lauren can confirm the numbers afterwards to you. And what I know is that Budweiser is declining 35 bps in terms of share last quarter in the U. S. So Lauren can you Sorry, I'm talking about ex sorry, you said, just talking about ex home markets, so in the growth markets. Well, that I had in my I had that in my speech. Oh, here. We had that on Page 11 of our script. So if you look at global brands outside of home markets, they are growing at 16.8% for 2017 revenue growth, right? And if you go now for Page 12, you see that Stella Artois or better say, Corona is growing revenue 39%, 39.9% outside of Mexico, Budweiser 10.8% outside of the U. S. And Stella Artois, we'll have to get you that number, but should be very close to the 12.8% because Belgium is growing very, very slightly. So around 12% outside of the home market. So those are the numbers. Okay. Thank you. Our next question comes from the line of Mark Swartzberg of Franklin Links. Okay. Stifel Financial. Good afternoon, everyone. Brito, on the U. S, really building on Brett's questions, you drew attention to this focus on hyper local execution. So question 1 is how important might that be? What are you seeing from these test markets that might be encouraging for the larger performance in the U. S? And then secondly, you also drew attention to quality messaging and innovation for Bud Light and you've been seeing encouraging signs for Bud Light for a number of years. Is there any reason to think that the quality messaging will be more impactful to improving the share trends for the brand? Yes. Mark, I think on Bud Light, it's interesting. We've had a lot of positive feedback from Bud Light Drinkers on our essential ingredients contained because it had been a while since the last time we spoke about ingredients, what goes into the beer and quality of Bud Light and the special process and everything. So that was something that was very well received. It will continue to make that part of our Bud Light communication. So we made it a priority for Bud Light to defend its quality credentials for sure. And we'll continue to highlight the power and mostly the simplicity. We've received some consumers are a bit tired of the complexity of the category that it became with all crafts and all different liquids that are very hard to understand. And Bud Light is a simple beer with essential ingredients, fresh and that appeals to a lot of consumers. And Dilly Dilly, on the other hand, put Bud Light back into pop culture, number one topic in conversation in terms of beer and social media. It's something that brought Bud Light a lot of what made Bud Light big, which is being tuned with young people, young adults and also being topical in terms of conversation. So I think dillability, I think quality message and continued execution and some insights from the category expansion model in terms of easy drinking will make a difference for Bud Light. Your first question was? About the hyper local execution. You've had some test markets in 2017. How encouraging are they for what might happen nationally in 2018? Yes. I think one thing we did in the U. S. Was that we centralized maybe too much and we have too many programs that are national. And the fact is that the U. S. Like China and Brazil is a continent in itself. And you have many different U. S. Within the U. S. So states are very different from the Heartland, coast to more Hispanics to all sorts of different Hispanics, some more Mexicans, some Cubans, some Dominicans. And we have brands that appeal to all these different ethnicities. But when you have a national program, it's very hard to execute as per different markets makeup. So I've been traveling the U. S. For the past 3 weeks with the new leadership, Michelle, Brandon, Marcel. And what we see is that there is an opportunity to really go back to many years ago when we had more regional events and we had different portfolio makeups, slightly different per region because again, in some place, you have Dominicans who have Presidente, the number one by far in the Dominican Republic. Then if you have Mexicans, again, Bud Light is the number one beer with Hispanics. But we need to tailor the message to the Hispanic consumer and also invest behind Stray Jalisco, which by the way, this year will be a big year for it because it's a sponsor of the World Cup and the Mexican national team in the U. S. And so on and so forth. So I think it's something that we need to do better. You go to Miami, DAX, for example, has a strong following. So I mean, there are many different things that could be hidden jewels, not to talk about craft and specialties that go better here and there, place where you have more events than others. So different things that we'll try more and more to tackle in this huge continent called the U. S. As we do in China, as we do in Brazil. So nothing new, just that we have to apply to the U. S. As well. Great. Thank you, Brito. You're welcome. Our next question comes from the line of Mitch Cohen of Goldman Sachs. Hi, there. In the outlook statement, you say that you expect to deliver net revenue back to liter ahead of inflation. Do you think you achieved that in F 2017? And does that imply revenue per hectoliter growth can accelerate in F 2018? And if it does, would you expect that to be offset by volume being slightly softer? And then I just wanted to come back to the U. S, where you've said that a few times that you want to get the right balance between share and profitability. This year, your gross margin went up 90 basis points more than your EBITDA margin. What would be the right balance between profitability and market share within the U. S? Thanks. Well, I'll start from the second question. I mean, in terms of the U. S, what we have is a market with very strong cash flow, very strong margins, hard currency and an amazing scale. So we want to keep that. Of course, we want to grow that. But more than growing, we want to first keep and then grow as we did, by the way, in 2017, in which we grew EBITDA by 1.9%. We want to continue to grow cash flow as we did, by the way, in 2017 in North America. But we have to get that share profitability right. We mentioned I mentioned here with Mark and Brett many of the things we're doing in the U. S. And we want to do it the right way, so it's sustainable, so it's profitable, so it's accretive. So that's our intention in the U. S. In terms of your first question, our inflation, plant inflation for our footprint was 4% or between 3.5% 4 percent last year and we grew top line by 5.1%. So what we said for the outlook was already achieved last year and prior to that. And that is done through mix mostly, okay? So yes, just one example, 2017 was a good example. Okay. And I guess as a follow-up to that, given the shift you've highlighted in your business towards growth markets and given the acceleration for your global brands as well as your new category management initiatives, do you think the 5 year CAGR is the right starting point when we think about your organic revenue growth for the next 2 or 3 years? Or could it be slightly higher than that? Well, 2017 was higher and SAB part of markets that are more growth oriented by the very nature of this market. So we're not giving any guidance here, but of course, we'll continue to work to beat that 5 year CAGR going forward. That you can be sure. Got it. Thank you. Our next question comes from the line of Pablo Solana of SIG. Thanks for taking the question. One for Felipe and one for Brito. Felipe, just remind us by how much did EBITDA margins in Mexico increase over the last 5 years. And the reason I asked for the refresher is just that if you can give us some color in terms of where were margins for the beer business in Colombia, Peru and South Africa when you took over that business? Obviously, we have the SAB numbers at the regional level and consolidated, but we don't have that kind of granularity. So that would help. And the second one, Brito, for you. Obviously, great quarter, great year, lots of momentum in the beer business, so much to do, so much opportunity. And even in the U. S, you talk about the next 10 years. So I guess my question is when I hear Felipe in every call tell us that M and A remains a core competency for the company, and here we are all of us on the buy and sell side thinking, okay, there's nothing else for Enricer Busch to buy in the beer industry pretty much that's sizable and relevant for them. So you don't have to get out of beer and go into other categories. And I guess I'm asking just help us think through that because you've done so well in beer, you do have a little opportunity there. So there's this risk looming that you have to enter a new category. How should we think about that? Well, Pablo, well, thanks. At this point, we're really focused on finish our integration. Let's just remember, we did a huge combination business combination. We're far from done. We had a very good start. 2017 was our 1st full year. Integrations normally take 2, 3 years to be totally done. In terms of synergies, integration, best practice, best of both. So I wouldn't just write off what we're doing now as, okay, it's done, next. We also have deleveraging that we need to do before we can think of anything else. And so and 99.9% of our people in the company, of our 200,000 colleagues are always, not now, but always focused on the organic business at hand. And only a few people are looking at the market opportunities, and we don't do that every day. So our business is really to grow what we have. We don't need to do any more acquisitions. We have an amazing portfolio. We have leading positions in 9 out of the 10 top markets for beer today and where growth is going to come from in the future. We're operating in 50 markets. As you saw in the two charts, we have leading top line and cash conversion and EBITDA margin compared to FMCG. We want to do better than that. We can do better than that. So we have lots to do. Very happy with the year 1 of integration, but it's not done yet. So too soon to think of anything other than that at this point. So on the first one, for the synergies announced as part of the Modelo transaction, that would imply an EBITDA margin expansion in the mid teens and to be capturing 3 years. 3 years are well behind and the business continue to expand margins, showing that, yes, there is a big wave that comes together with synergies and then more the combination of keeping net revenues growing ahead of inflation, while costs will be below inflation that should drive further margin expansion compounded by volumes growth. So that is that. On the SAP transaction, it's no different. When you apply the 3,200,000,000 dollars follows on the former SAP EBITDA prior to the combination, that would imply margin expansions in the mid teens. And therefore, that should be captured across all SAP markets as synergies are captured. I hope that gives you a sense on what it's That's very helpful, Friede. Brico, Vanessa, just a quick follow-up. In the U. S, I mean, obviously, corona is doing great overseas, like you described. It's also doing very well in the U. S, right? And so far, your Mexican brands, Montejo, Estrella, haven't really tackled Corona. I would argue that Corona, it's more a lifestyle brand that supports the growth there than necessarily Hispanic side of it, although that also helps. My question is, you have Kona in your portfolio that, in my opinion, a very strong potential direct competitor of Kona, But your distribution is not doing much with it. When I say you have it, I mean, obviously, it belongs to another company, but you are the distributor for it. I think you could be doing a lot more with that brand and maybe challenging corona more directly in lifestyle. Thanks. Yes. I think the category expansion model opening our eyes to many opportunities. I'm not going to comment anything specifically because this is a competitive sensitive, but I think it's something that we are applying to the U. S, our main market. And it's interesting to see how some insights are sometimes not the obvious ones. So again, we have an amazing portfolio. We have brands that, as you said, can be activated more intensely in segments or regions. We have to be more region specific because the U. S. Is a continent. Where do you do that, by the way, in Brazil? If you go to Brazil and you look at what we do in the Northeast compared to the Southeast, the problems are very different. Of course, when you have a World Cup or Carnival, that's across the country. But the rest of the year, the programs are very different. You go to China, same thing. I mean, to go to Guangdong or go to Sichuan, the programs, of course, some are national, but a lot of them are very, very localized. And in the U. S. For some reason, we took that empowerment from the regions and now we're giving it back. Of course, we tested in the last 2 years, and we're giving some of that back because we see opportunities with zip code analysis of database that we have now with big data, with lots of things that were not available before and that now are available. We also enhanced our leadership to be able to have that kind of empowerment to make those kind of decisions on a local level. And the wholesalers that are now closer to us and vice versa are also amazing partners in deciding or helping us decide how to best tailor programs to different regions. They've been there for generations. They have invested interest in 90% of their volume or close to it is our products, and they are very, very loyal to our brands and very interested in succeeding. It's win win for both of us. So we're going to be working more closely with the panel in our win together program with the wholesalers that was started 2 years ago, and that's going very well. So that's all part of this logic of more localization. Understood. Thank you. And ladies and gentlemen, we do have time for one more question. Our final question will come from the line of Sanjay Ajrawal of Credit Suisse. Hi. A few questions on the category expansion framework, please. If my memory serves me correct, this was a 5 to 10 year plan for SAB. How quickly do you think it can have a visible impact on your results? Do you think it should be sooner than that? Secondly, do you think you've got enough people from SAB to help you execute on the category expansion framework and embedding that across the organization? And thirdly, just specifically on refreshing and segmenting co lager brands between classic and easy drinking is something you gave the example of having done it in Argentina. Are you planning to implement that across all markets? And will that be happening over the next 12 to 18 months? That's a very good question because what we see in many of our markets is that because core Lager has always been the center of gravity of our business. Most of our business, most of our strong brands are in that box. Sometimes we've been not very accurate in positioning brands in different domains in consumer minds. And sometimes they are just on top of each other. And what the category framework showed us is that these brands can be better positioned and therefore have less cannibalization and appeal to different occasions and different consumer needs if done correctly according to the model. So for example, in Argentina, we had the example of Quilmes and Brahma being right on top of each other. And consumers didn't know exactly why I should pick 1 or the other. And last year, we did was the 1st country where we took the learnings even before the year started because we learned about that in 2016 and executed that and separated in terms of communication, packaging, every touch point to separate more between core lager or plastic lager and easy drinking. And the results are very good. We're very good. So we are very excited about going to markets where we have similar issues, including the U. S, where Bud and Bud Light sometimes sit very close to each other, including Brazil, where Skol and Brahma for a long time have used some properties that are the same, we're very close, executed in the same displays in the supermarket and all that and tried to really get these personalities of these brands to really be more accentuated. So they appeal to different occasions, different consumer needs and therefore more complementary than cannibalistic, okay? In terms of people, yes, we have the people, our new colleagues from SAB, most of them that work with the category expansion model and most of them that we invited to stay that embrace our new dream of the new company stayed. So we're very excited, very proud to have to be called their partners, very proud to have them with us. And yes, and again, as I said at the very beginning of the call, the category expansion has been adopted last year in our 2 year plan, in our 1 year plan and became company language. It's not a marketing language, it's a company language, right? So thank you. So if there are no more further questions, Maria, let me summarize the call. So in summary, 2017 was a transformational year for our company. The integration with SAB is our most successful ever. This is the first and foremost due to our people who have continued to amaze us throughout this process. We're also very excited about the intellectual synergies that have arisen from the combination, such as for example, the category expansion framework we just discussed. Additionally, we achieved our best performance in the last 3 years, growing revenue in 9 out of top 10 markets and achieving double digit EBITDA growth. We'll continue to work hard to grow the global beer category while evolving our brand portfolio to ensure we're rising to every occasion to capture future growth. We're very excited about 2018, knowing that the Q1 will be soft. And the reasons for that are very simple. 1st, phasing of sales and marketing initiatives, largely due to the World Cup year. If you go back to 2010 2014, the 2 last World Cups, you'll see that our first quarters or first half of the year are normally more charged in terms of sales and marketing because of all the promotions we do leading to the World Cup. So this year will be no different. The other reason is that there is a soft top line start in Brazil. So not only Carnival was earlier this year. 2nd, we had very poor weather since mid December in Brazil, which again affected sales. And we also have a tough comp because last year, in the Q1, our Brazilian business, beer Brazil business grew ahead of the industry, 5.5 percentage points ahead of the industry. So gain share big time last quarter. So weather, Carnival, tough comp. And there's also some inventory in China that moved because of Chinese New Year, just like Carnival moving in the calendar year. So again but again, we're very excited about 2018. As we said in our outlook, we remain excited and committed to deliver strong revenue and EBITDA growth in the year, knowing that the Q1 will be soft as a result of everything I'd say. So again, thank you very much for joining the call and dilly dilly to all of you. Thanks so much. Bye bye. Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines at this time and have a wonderful day.