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ANHEUSER-BUSCH INBEV SA/NV - Anheuser-Busch InBev reports First Quarter 2019 Results

Release Date: 07/05/2019 07:30
Code(s): ANH     PDF:  
 
Wrap Text
Anheuser-Busch InBev reports First Quarter 2019 Results

      Anheuser-Busch InBev SA/NV
      (Incorporated in the Kingdom of Belgium)
      Register of Companies Number: 0417.497.106
      Euronext Brussels Share Code: ABI
      Mexican Stock Exchange Share Code: ANB
      NYSE ADS Code: BUD
      JSE Share Code: ANH
      ISIN: BE0974293251
      (“AB InBev” or the “Company”)

      Anheuser-Busch InBev reports First Quarter 2019 Results
      
      The enclosed information constitutes regulated information as defined in the Belgian Royal Decree of 14 November 2007 regarding the duties of issuers
      of financial instruments which have been admitted for trading on a regulated market.
      Except where otherwise stated, the comments below are based on organic growth figures and refer to 1Q19 versus the same period of last year. For
      important disclaimers and more information on 2018 Restated and the Reference Base, please refer to page 13.



          HIGHLIGHTS
      •     Momentum continued from 4Q18 into 1Q19 with healthy volume growth of 1.3%, revenue growth of
            5.9% and EBITDA growth of 8.2% with margin expansion of 86 bps
      •     Ongoing success of our premiumization strategy supporting top and bottom line growth with global
            brand revenue growth of 8.5% (14.0% outside of the brands’ home markets) and High End Company
            revenue growth of almost 20%
      •     Double digit volume growth in Brazil in both our beer and non-beer businesses, outperforming the
            industry in both categories
      •     Continued market share trend improvement in the US, with the best quarterly market share trend
            performance since 4Q12 led by our premiumization and innovation initiatives
      •     We continue to make good progress toward our ambitious 2025 sustainability goals, reducing carbon
            emissions across our value chain by 4.5% over the last year

          KEY FIGURES
      •     Revenue: Revenue grew by 5.9% in the quarter, with revenue per hl growth of 4.6%, driven by healthy
            volume growth, global premiumization and revenue management initiatives
      •     Volume: Total volumes grew by 1.3%, with own beer volumes up 1.0% and non-beer volumes up 4.9%
      •     Global Brands: Combined revenues of our three global brands, Budweiser, Stella Artois and Corona,
            grew by 8.5% globally, and by 14.0% outside of their respective home markets
      •     Cost of Sales (CoS): CoS increased by 6.0% in 1Q19 and by 4.6% on a per hl basis
      •     EBITDA: EBITDA increased by 8.2% in the quarter, with EBITDA margin expansion of 86 bps to 39.6%,
            as a result of top-line growth and enhanced by premiumization and ongoing cost discipline
      •     Net finance results: Net finance costs (excluding non-recurring net finance results) were 363 million
            USD in 1Q19 compared to 1 577 million USD in 1Q18. The improvement was predominantly due to a
            mark-to-market gain of 951 million USD in 1Q19 linked to the hedging of our share-based payment
            programs, compared to a loss of 242 million USD in 1Q18, resulting in a swing of 1 193 million USD
      •     Income taxes: Normalized effective tax rate (ETR) decreased to 20.1% in 1Q19 from 28.0% in 1Q18.
            Excluding the impact of gains relating to the hedging of our share-based payment programs, our
            normalized ETR was 27.7% in 1Q19 as compared to 25.4% in 1Q18


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      •    Profit: Normalized profit attributable to equity holders of AB InBev was 2 516 million USD in 1Q19
           versus 1 443 million USD in 1Q18. Underlying profit (normalized profit attributable to equity holders of
           AB InBev excluding mark-to-market gains linked to the hedging of our share-based payment programs
           and the impact of hyperinflation) was 1 572 million USD in 1Q19 as compared to 1 685 million USD in
           1Q18
      •    Earnings per share (EPS): Normalized EPS in 1Q19 was 1.27 USD, an increase from 0.73 USD in
           1Q18, positively impacted by mark-to-market gains linked to the hedging of our share-based payment
           programs. Underlying EPS (normalized EPS excluding mark-to-market gains linked to the hedging of
           our share-based payment programs and the impact of hyperinflation) was 0.79 USD in 1Q19, a
           decrease from 0.85 USD in 1Q18, as our strong performance was more than offset by the negative
           impact of unfavorable currency translation effects

      •    Combination with SAB: The business integration resulted in synergies and cost savings of 100 million
           USD in 1Q19. We have now delivered 3 038 million USD of the expected 3.2 billion USD synergies and
           cost savings on a constant currency basis as of August 2016
      Figure 1. Consolidated performance (million USD)
                                                                                     1Q18            1Q18           1Q19           Organic
                                                                                  Restated Reference Base                          growth
      Total Volumes (thousand hls)                                                 134 831        134 831         133 462             1.3%
                                                  AB InBev own beer                118 351        118 351         117 016             1.0%
                                                   Non-beer volumes                 15 342         15 342          15 551             4.9%
                                                 Third party products                1 138           1 138            895           -20.7%
      Revenue                                                                       13 095         13 090          12 589             5.9%
      Gross profit                                                                   8 094           8 086          7 714             5.8%
      Gross margin                                                                  61.8%           61.8%          61.3%             -5 bps
      Normalized EBITDA                                                              5 126           5 120          4 989             8.2%
      Normalized EBITDA margin                                                      39.1%           39.1%          39.6%             86 bps
      Normalized EBIT                                                                3 960           3 955          3 838             8.9%
      Normalized EBIT margin                                                        30.2%           30.2%          30.5%             57 bps

      Profit attributable to equity holders of AB InBev                              1 019                          3 571
      Normalized profit attributable to equity holders of AB InBev                   1 443                          2 516
      Underlying profit attributable to equity holders of AB InBev                   1 685                          1 572

      Earnings per share (USD)                                                        0.52                           1.80
      Normalized earnings per share (USD)                                             0.73                           1.27
      Underlying earnings per share (USD)                                             0.85                           0.79

      Figure 2. Volumes (thousand hls)
                                                        1Q18            Scope           Organic         1Q19           Organic growth
                                              Reference Base                            growth                  Total Volume Own beer volume
      North America                                   24 814                  -           - 292        24 522          -1.2%           -1.2%
      Middle America                                  30 738               - 54           - 171        30 513          -0.6%           -1.2%
      Europe Middle East & Africa                     20 549            -2 812              419        18 156           2.4%            2.4%
      South America                                   34 088              167             2 013        36 268           5.9%            5.6%
      Asia Pacific                                    24 296                  -           - 310        23 986          -1.3%           -0.3%
      Global Export and Holding Companies                346             -346                16            16              -               -
      AB InBev Worldwide                             134 831            -3 045            1 676       133 462           1.3%            1.0%


          MANAGEMENT COMMENTS

      2019 is off to a strong start as we accelerated our momentum from 4Q18 into a solid 1Q19 performance.
      Revenue grew by 5.9% driven by volume growth of 1.3% (own beer +1.0%, non-beer +4.9%) and revenue
      per hl growth of 4.6%, in line with our guidance for more balanced top-line growth.

      The top-line result was driven by healthy performances in several of our key markets, including Brazil,
      China, the US, Europe, Colombia and Nigeria. We saw especially strong volume growth from markets such
      as Brazil, Nigeria, Europe, Peru and Colombia. This was partially offset by softer volume results in markets

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      such as South Africa and Argentina, where the consumer remains under pressure due to challenging
      macroeconomic conditions. Furthermore, our results were held back by the later timing of the Easter holiday
      in markets for which this is an important consumption occasion, including the US, Mexico, Colombia, South
      Africa and Australia. We expect this impact to normalize on a half year basis.

      Brazil led the way in volume growth this quarter, with both its beer and non-beer businesses growing by
      double digits, outperforming the industry. We grew volume across all segments of our portfolio, and we
      have already seen meaningful contributions from recent innovations and line extensions including Skol Puro
      Malte and our affordable beers brewed with local ingredients: Nossa and Magnífica. We also continued to
      gain share in the growing premium segment, reinforcing our belief that growth in this segment will be
      achieved through a superior portfolio of brands, not just in Brazil but globally.

      We continue to improve our performance in the US as the result of an evolved commercial strategy focused
      on premiumization and innovation. Leveraging the momentum built throughout last year, top-line growth in
      1Q19 was supported by our best market share trend performance in the past 25 quarters with an estimated
      market share decline of only 10 bps.

      Globally, top-line and bottom line performance continues to benefit from positive brand mix driven by the
      growth of our unparalleled portfolio of premium brands. Our global brands grew revenues by 8.5% and by
      14.0% outside of their home markets, while our High End Company grew revenues by 19.9%.

      EBITDA grew by 8.2% in 1Q19 with margin expansion of 86 bps to 39.6%. This was driven by operating
      leverage from the solid top-line result as well as favorable brand mix, ongoing cost discipline and continued
      synergies from the SAB combination, partially offset by significant commodity and transactional currency
      headwinds.

      We continue to make good progress toward our ambitious 2025 sustainability goals launched in March
      2018, reducing carbon emission across our value chain by 4.5% over the last year. We successfully tested
      electric vehicles to be added to our fleets in Mexico and Colombia and ordered up to 800 Nikola trucks in
      the US. This brings us closer to our global goal of reducing carbon emissions by 25% across our entire
      value chain by 2025, which is aligned to the UN Sustainable Development Goal for Climate Action.

      In addition, we are actively exploring a potential minority stake listing of our Asia Pacific (APAC) business
      on the Hong Kong Stock Exchange. Proceeding with a listing will depend on a number of factors, including,
      but not limited to, valuation and prevailing market conditions.

      The merits of this initiative are based upon the creation of an APAC champion in the consumer goods
      space. Furthermore, our superior portfolio of brands and leadership position in the beer industry provide an
      attractive platform for potential M&A in the region.

      We appreciate that a minority stake listing would accelerate our deleveraging path. Nonetheless, our
      commitment to reach a net debt to EBITDA ratio below 4x by the end of 2020 is not dependent on the
      completion of such a transaction.

      We continue to believe that our strong commercial plans, best-in-class portfolio of brands, diverse
      geographic footprint, unparalleled operating efficiency and strong pipeline of committed and talented people
      position us to continue delivering strong results in 2019 and beyond. We remain committed to leveraging
      this momentum to lead the global beer category while positioning ourselves to deliver sustainable, long-
      term growth.




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       2019 OUTLOOK

         (i)    Overall Performance: In FY19, we expect to deliver strong revenue and EBITDA growth, driven
                by the solid performance of our brand portfolio and strong commercial plans. Our growth model is
                even more focused on category expansion, targeting a more balanced top-line growth between
                volume and revenue per hl. We expect to deliver revenue per hl growth ahead of inflation based
                on premiumization and revenue management initiatives, while keeping costs (sum of CoS plus
                SG&A) below inflation.

         (ii)   Cost of Sales: We expect CoS per hl to increase by mid-single digits, with currency and
                commodity headwinds to be offset by cost management initiatives.

         (iii) Synergies: We maintain our 3.2 billion USD synergy and cost savings expectation on a constant
               currency basis as of August 2016. From this total, 547 million USD was reported by former SAB
               as of 31 March 2016, and 2 491 million USD was captured between 1 April 2016 and 31 March
               2019. The balance of roughly 150 million USD is expected to be captured by the end of 2019.

         (iv) Net Finance Costs: We expect the average gross debt coupon in FY19 to be between 3.75-
              4.00%. Net pension interest expenses and accretion expenses including IFRS 16 adjustments
              (lease reporting) are expected to be approximately 160 million USD per quarter. Net finance costs
              will continue to be impacted by any gains and losses related to the hedging of our share-based
              payment programs.

         (v)    Effective Tax Rate (ETR): We expect the normalized ETR in FY19 to be in the range of 25% to
                27%, excluding any gains and losses relating to the hedging of our share-based payment
                programs.

         (vi) Net Capital Expenditure: We expect net capital expenditure of between 4.0 and 4.5 billion USD
              in FY19.

         (vii) Debt: Approximately 44% of our gross debt is denominated in currencies other than the US dollar,
               principally the Euro. Our optimal capital structure remains a net debt to EBITDA ratio of around
               2x. We expect our net debt to EBITDA ratio to be below 4x by the end of 2020.

         (viii) Dividends: We expect dividends to be a growing flow over time, although growth in the short term
                is expected to be modest given our deleveraging commitments.




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       BUSINESS REVIEW

      United States

      In the US, the continued implementation of our commercial strategy led to top-line growth of 1.6% in 1Q19.
      Revenue per hl grew by 2.6%, driven by the premiumization of our portfolio and our revenue management
      initiatives. We estimate that industry sales-to-retailers (STRs) declined by 1.6% in 1Q19, while our own
      STRs were down by 1.9% and our sales-to-wholesalers (STWs) were down 0.9%.

      Our market share trend performance continues to improve, as we invest behind the sustained momentum
      of our above core portfolio and the stabilization of our core and value brands. Nine of our brands were
      among the top fifteen market share gainers in the country in 1Q19 according to IRI, contributing to an
      estimated decline in total market share of 10 bps, our best quarterly market share trend performance since
      4Q12.

      Our above core portfolio outperformed the industry once again, gaining 90 bps of market share as per our
      estimates, led by Michelob Ultra, our regional craft portfolio, Bon & Viv Spiked Seltzer and our innovations
      in the segment. Michelob Ultra continues to shine, leading the industry again as the top share gainer in the
      US. Our regional craft portfolio grew double digits in 1Q19, further enhancing our premiumization efforts.
      Our above core innovations maintained their strong performance and gained share, led by Michelob Ultra
      Pure Gold Organic, Bud Light Orange and the Budweiser Reserve series.

      The mainstream segment remains under pressure as consumers trade up to higher price tiers, with our
      core, core light and value brands delivering an estimated 100 bps of market share loss in 1Q19. Within the
      mainstream segment, our portfolio had a slight share gain, which compares to a 35 bps share of segment
      loss in FY18, driven by the improved performance of our value brands led by the Natural family, while
      Budweiser and Bud Light share trends remain unchanged. Following the most recent Super Bowl’s
      campaign launch highlighting Bud Light’s commitment to quality and transparency, we are seeing initial
      positive signs in the key brand health metrics which are near three-year highs as of 1Q19.

      EBITDA grew by 2.5% in 1Q19 with margin expansion of 34 bps to 39.6%, driven by our premiumization
      strategy and the ongoing optimization of our cost base.


      Mexico

      Revenue grew by low single digits with revenue per hl growth of mid-single digits driven by revenue
      management initiatives coupled with favorable brand mix. The top-line result was negatively impacted by a
      volume decline of just under 4% in the first quarter of the year despite us outperforming the industry in
      1Q19 according to our estimates. This decline is fully explained by the later timing of the Easter holiday,
      and we expect the impact to normalize on a half year basis.

      We have seen strong growth in our key focus segments driven by our commercial activations. This was led
      by strength from our core portfolio of brands, which have been firmly establishing themselves in the classic
      lager space in line with the category expansion framework. This positioning is enhanced by new campaigns
      highlighting the quality and tradition of the brands. Additionally, our premium portfolio continues to
      contribute meaningfully to our results, led by Michelob Ultra with growth of more than 30% and Stella Artois
      with growth of more than 80%.

      The first quarter of 2019 held some important milestones for our business in Mexico. In March, we signed
      a contract with OXXO, the largest retailer in Mexico, to begin selling our portfolio of beers in their 17 000+


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      stores in order to reach more consumers in more occasions. As of 1 April 2019, the agreement initiated by
      covering the central western region including the metropolitan area of Guadalajara and it will expand by
      mid-year to other central regions including Mexico City, in total reaching more than 4 000 stores by the end
      of HY19. This agreement will progressively cover all of Mexico by the end of 2022. We also inaugurated
      our Centro brewery in the beginning of March, which enhances our local production to support growth while
      enabling us to optimize our distribution footprint.

      EBITDA grew by double digits in 1Q19 with margin expansion of 460 bps to 47.8%. This result was primarily
      driven by favorable brand mix, a reduction in distribution expenses as a result of footprint optimization and
      ongoing cost discipline.


      Colombia

      In Colombia, we grew revenue by high single digits this quarter, supported by high single digit revenue per
      hl growth resulting from positive brand mix from the continued strong performance of our global brand
      portfolio. Total volumes grew by low single digits despite the negative impact from the later timing of the
      Easter holiday, with growth in both beer and non-beer volumes.

      Our global brand portfolio grew by more than 60%, led by an especially strong performance of Budweiser.
      Our local brand portfolio also performed well, driven by successful commercial initiatives behind our Aguila,
      Poker and Club Colombia brands.

      We grew EBITDA by double digits in 1Q19 with margin expansion of close to 300 bps, driven by revenue
      growth and continued synergy capture.


      Brazil

      Our business in Brazil got off to a very strong start this year, with total revenue growth in the quarter of
      16.7%. This was driven by revenue per hl growth of 3.9% and volume growth of 12.4%, with both our beer
      and non-beer businesses delivering robust results (beer volume +11.3%, non-beer volume +16.3%) versus
      industry volumes up low single digits for both categories as per our estimates.

      The strong growth was broad-based as we grew volume across all segments of our portfolio, and was
      supported by the later timing of Carnival versus the prior year, which resulted in a favorable comparable.
      We continue to gain share in the growing premium segment, led by our global brand portfolio with growth
      rates of more than 50% and our local premium brands, which were up by double digits. Our core plus
      brands also performed very well, led by triple digit growth of Bohemia. Our core portfolio returned to growth
      this quarter and was enhanced by the launch of Skol Puro Malte, an innovation that offers consumers a
      pure malt choice in the core segment that is showing early success. Additionally, we continued to scale up
      our two affordable brands brewed with ingredients grown by local farmers, Nossa and Magnífica, with very
      positive results to date. We continue to explore additional opportunities to scale up this initiative throughout
      relevant states to increase our presence in the value segment with comparable margins to our core brands.

      EBITDA grew by 8.5% with margin compression of 310 bps to 40.7%. The top-line growth was partially
      offset by higher cost of sales which put pressure on our margins, driven mainly by higher aluminum and
      barley prices as well as a negative impact from the devaluation of transactional currency. This result was
      in line with our expectation of cost of sales per hl growth of mid-teens in Brazil in 2019, which should be
      weighted toward the first three quarters of the year. Additionally, we faced an increase in our SG&A as a
      result of the timing of variable compensation accruals, partially offset by ongoing cost discipline.



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      South Africa

      1Q19 was challenging in South Africa, as expected. Revenue declined by mid-single digits, predominantly
      due to lower volumes driven by the later timing of the Easter holiday and coupled with lower consumer
      demand. This was due to an ongoing challenging macroeconomic environment and continued segment mix
      shift toward the premium segment, where we still have lower market share than our average. Revenue per
      hl was flattish in 1Q19 as a result of the timing of revenue management initiatives.

      Our high end portfolio continues to grow by double digits and we have gained more than 6 percentage
      points of market share in the growing premium segment versus 1Q18. This was led by the strong
      performances of Corona and Budweiser. In the core segment, which is more elastic and therefore more
      exposed to macroeconomic challenges, our volumes remained under pressure.

      EBITDA was down by mid-teens with margin compression of approximately 600 bps driven by lower
      volumes and higher distribution costs coupled with a significant increase in our marketing investments
      behind our growing global brands and on-trade programs.


      China

      Revenue grew by 7.8% in China driven by revenue per hl growth of 9.0% and a volume decline of 1.1%.
      The volume decline was primarily caused by the timing of the Chinese New Year, which fell earlier this year
      than in the prior year, resulting in a shift from 1Q19 into 4Q18. We continue to drive healthy brand mix and
      ongoing premiumization, which led to strong revenue per hl growth.

      Budweiser continues to perform very well with mid-single digit volume growth supported by the successful
      Chinese New Year activation and the launch of the new global “Be A King” campaign. Our super premium
      portfolio grew volumes by double digits, with particularly strong performances of Corona, Franziskaner and
      Hoegaarden. In the core plus segment, we launched Harbin Crystal, an easy drinking lager that encourages
      our younger LDA consumers to trade up by activating key cultural passion points. Our e-commerce
      business also continues to increase relevance with continued double digit volume growth.

      EBITDA grew by 18.8% with margin expansion of 367 bps as a result of strong revenue growth,
      premiumization and improved cost efficiency.


      Highlights from our other markets

      Canada top-line declined by low single digits in 1Q19, driven primarily by a weaker beer industry and our
      share performance within the value segment, partially offset by the continued success of our trade-up
      strategy. Our High End Company in Canada is growing ahead of the industry, led by the double digit volume
      growth of our premium import brands. Our focus core and core plus brands also delivered strong results
      once again, with Bud Light continuing its share gains and Michelob Ultra remaining the fastest growing
      brand in the quarter.

      In Peru, we grew volumes by low single digits and revenue by high single digits in 1Q19, supported by
      revenue management initiatives and positive brand mix from the ongoing growth of our global brands. In
      Ecuador, we grew revenue slightly despite a low single digit volume decline driven by a challenging
      macroeconomic environment. We gained an estimated 120 bps of share of total alcohol in the quarter, led
      by the continued growth of our global brands and a successful affordability strategy.




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      In Argentina, we continue to face a very difficult macroeconomic environment placing significant pressure
      on consumers, which led to a mid-teens volume decline in 1Q19, while revenues grew due to our revenue
      management initiatives. We remain confident in the underlying strength of our brands and are focused on
      offering a diverse portfolio to meet a variety of consumer needs across different occasions. Our premium
      brands, led by Stella Artois, Corona and Patagonia, performed well and are gaining share within the growing
      premium segment. We remain very excited to have Budweiser back and are refining our strategies to
      strengthen the brand’s performance now that it is part of our portfolio. Given the challenging consumer
      environment, we have launched new affordable returnable packs for our core brands, Quilmes and Brahma,
      offering consumers accessible choices during the macroeconomic downturn.

      Within EMEA, Europe grew revenue by mid-single digits and delivered mid-single digit, broad-based
      volume growth and market share gains in the majority of markets in which we operate. The UK continues
      to deliver volume growth and market share gains, with both Budweiser and Bud Light growing double digits.
      The launch of Budweiser has strengthened our portfolio in France, where we continue to gain market share
      with volume growth of mid-single digits. Additionally, Belgium grew volumes mid-single digits underpinned
      by gains both in on and off-premise. Across Africa excluding South Africa, we had continued volume growth
      in all of our markets except Mozambique, due to the devastating effects of a severe cyclone, and Tanzania,
      due to the later timing of the Easter holiday. Nigeria continues to lead the way with revenue per hl expansion
      and continued double digit volume growth fueled by the core portfolio as well as Budweiser in the premium
      segment.

      In Australia, a low single digit revenue decline was driven by lower volumes due to the later timing of the
      Easter holiday as well as a softer industry performance amidst declining consumer confidence. Segment
      mix shift to easy drinking and premium products continues, with our Great Northern franchise as well as
      our craft portfolio of 4 Pines and Pirate Life delivering double digit volume growth. Corona saw continued
      volume growth underpinned by stronger brand health metrics.


       CONSOLIDATED INCOME STATEMENT

      Figure 3. Consolidated income statement (million USD)
                                                                        1Q18            1Q18     1Q19        Organic
                                                                     Restated Reference Base                 growth
      Revenue                                                          13 095         13 090    12 589          5.9%
      Cost of sales                                                    -5 002          -5 004   -4 875         -6.0%
      Gross profit                                                      8 094           8 086    7 714          5.8%
      SG&A                                                             -4 320          -4 318   -4 036         -2.5%
      Other operating income/(expenses)                                   186             186      160         -5.9%
      Normalized profit from operations (normalized EBIT)               3 960           3 955    3 838          8.9%
      Non-recurring items above EBIT                                      - 96                     - 45
      Net finance income/(cost)                                        -1 577                    - 363
      Non-recurring net finance income/(cost)                           - 330                    1 122
      Share of results of associates                                        57                       53
      Income tax expense                                                - 666                    - 723
      Profit                                                            1 346                    3 882
      Profit attributable to non-controlling interest                     327                      311
      Profit attributable to equity holders of AB InBev                 1 019                    3 571

      Normalized EBITDA                                                 5 126           5 120    4 989         8.2%
      Normalized profit attributable to equity holders of AB InBev      1 443                    2 516




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      Non-recurring items above EBIT

      Figure 4. Non-recurring items above EBIT (million USD)
                                                                                             1Q18       1Q19
      Restructuring                                                                           - 54       - 28
      Acquisition costs / Business combinations                                               - 15         -7
      Business and asset disposal (including impairment losses)                               - 27       - 10
      Impact on profit from operations                                                        - 96       - 45

      Normalized profit from operations excludes negative non-recurring items of 45 million USD in 1Q19,
      primarily related to the one-off costs linked to the SAB integration.


      Net finance income/(cost)

      Figure 5. Net finance income/(cost) (million USD)
                                                                                    1Q18 Restated       1Q19
      Net interest expense                                                                  - 969       - 973
      Net interest on net defined benefit liabilities                                         - 24        - 25
      Accretion expense                                                                     - 111       - 144
      Mark-to-market                                                                        - 242         951
      Other financial results                                                               - 231       - 172
      Net finance income/(cost)                                                            -1 577       - 363

      Net finance cost was positively impacted by the mark-to-market gains on the hedging of our share-based
      payment programs. The number of shares covered by the hedging of our share-based payment programs,
      and the opening and closing share prices, are shown in figure 6 below.

      Figure 6. Share-based payment hedge
                                                                                            1Q18        1Q19
      Share price at the start of the period (Euro)                                         93.13       57.70
      Share price at the end of the period (Euro)                                           89.28       74.76
      Number of equity derivative instruments at the end of the period (millions)            46.9        46.9


      Non-recurring net finance income/(cost)

      Figure 7. Non-recurring net finance income/(cost) (million USD)
                                                                                             1Q18       1Q19
      Mark-to-market (Grupo Modelo deferred share instrument)                                - 117        468
      Other mark-to-market                                                                   - 114        455
      Early termination fee of Bonds and Other                                                 - 98       199
      Non-recurring net finance income/(cost)                                                - 330      1 122

      Non-recurring net finance income includes mark-to-market gains on derivative instruments entered into to
      hedge the shares issued in relation to the Grupo Modelo and SAB combinations.

      The number of shares covered by the hedging of the deferred share instrument and the restricted shares
      are shown in figure 8, together with the opening and closing share prices.




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      Figure 8. Non-recurring equity derivative instruments
                                                                                             1Q18         1Q19
      Share price at the start of the period (Euro)                                          93.13        57.70
      Share price at the end of the period (Euro)                                            89.28        74.76
      Number of equity derivative instruments at the end of the period (millions)             45.5         45.5



      Income tax expense

      Figure 9. Income tax expense (million USD)
                                                                                    1Q18 Restated         1Q19
      Income tax expense                                                                      666          723
      Effective tax rate                                                                   34.1%         15.9%
      Normalized effective tax rate                                                        28.0%         20.1%
      Normalized effective tax rate before MTM                                             25.4%         27.7%

      The increase in our normalized ETR excluding mark-to-market gains and losses linked to the hedging of
      our share-based payment programs is primarily driven by country mix.


      Profit, Normalized Profit and Underlying Profit

      Figure 10. Normalized Profit attribution to equity holders of AB InBev (million USD)
                                                                                      1Q18 Restated       1Q19
      Profit attributable to equity holders of AB InBev                                       1 019       3 571
      Non-recurring items, before taxes                                                          96          45
      Non-recurring finance (income)/cost, before taxes                                         330      -1 122
      Non-recurring taxes                                                                        -2          24
      Non-recurring non-controlling interest                                                     -1          -2
      Normalized profit attributable to equity holders of AB InBev                            1 443       2 516
      Underlying profit attributable to equity holders of AB InBev                            1 685       1 572

      Normalized profit attributable to equity holders of AB InBev was higher mainly due to lower net finance
      costs as a result of the positive impact of mark-to-market gains on the hedging of our share-based payment
      programs. Underlying profit attributable to equity holders of AB InBev decreased from 1 685 million USD in
      1Q18 to 1 572 million USD in 1Q19 as our strong performance was more than offset by the negative impact
      of unfavorable currency translation effects.


      Basic, Normalized and Underlying EPS

      Figure 11. Earnings per share (USD)
                                                                                    1Q18 Restated         1Q19
      Basic earnings per share                                                               0.52          1.80
      Non-recurring items, before taxes                                                      0.05          0.02
      Non-recurring finance (income)/cost, before taxes                                      0.17         -0.57
      Non-recurring taxes                                                                       -          0.01
      Normalized earnings per share                                                          0.73          1.27
      Underlying earnings per share                                                          0.85          0.79




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      Figure 12. Key components - Normalized Earnings per share in USD
                                                                                       1Q18 Restated                1Q19
      Normalized EBIT before hyperinflation                                                     2.01                 1.96
      Hyperinflation impacts in normalized EBIT                                                    -                -0.02
      Normalized EBIT                                                                           2.01                 1.94
      Mark-to-market (share-based payment programs)                                            -0.12                 0.48
      Net finance cost                                                                         -0.68                -0.66
      Income tax expense                                                                       -0.34                -0.36
      Associates & non-controlling interest                                                    -0.14                -0.13
      Normalized EPS                                                                            0.73                 1.27
      Mark-to-market (share-based payment programs)                                             0.12                -0.48
      Hyperinflation impacts in EPS                                                                -                    -
      Normalized EPS before MTM and hyperinflation                                              0.85                 0.79


      Adoption of hyperinflation accounting in Argentina

      After reaching a three-year cumulative inflation rate greater than 100%, we are reporting the results from
      Argentina applying hyperinflation accounting, starting from the 3Q18 results release in which we accounted
      for the hyperinflation impact for the first nine months of 2018.

      We have updated the 2018 Reference Base (up to Normalized EBIT) for the impact of hyperinflation
      accounting in Argentina as if we had applied hyperinflation accounting as of 1 January 2018.

      The impact of hyperinflation in 1Q18 and 1Q19 on our Revenue and Normalized EBITDA were as follows:

      Figure 13. Impact of hyperinflation
                                                                                                1Q18                1Q19
      Revenue
                                                                                      Reference Base
      Indexation(1)                                                                                 14                 14
      Currency (2)                                                                                 - 19              - 47
      Total impact                                                                                   -5              - 33

                                                                                                1Q18                1Q19
      Normalized EBITDA
                                                                                      Reference Base
      Indexation(1)                                                                                  4                     4
      Currency (2)                                                                                  -8               - 27
      Total impact                                                                                  -4               - 23

      USDARS average rate                                                                      19.4854           37.9659
      USDARS closing rate                                                                      20.1435           43.3528

      (1) Indexation calculated at closing rate
      (2) Currency impact from hyperinflation calculated as the difference between converting the Argentinean peso (ARS)
      reported amounts at the closing exchange rate compared to the average exchange rate of each period

      Furthermore, IAS 29 requires us to restate the non-monetary assets and liabilities stated at historical cost
      on the balance sheet of our operations in hyperinflation economies using inflation indices and to report the
      resulting hyperinflation through the income statement on a dedicated account for hyperinflation monetary
      adjustments in the finance line and report deferred taxes on such adjustments, when applicable.


                                                                                                                       11

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      In 1Q19 we reported 25 million USD monetary adjustment in the finance line, resulting in a negative impact
      on the profit attributable to equity holders of AB InBev of 4 million USD. There was no impact on normalized
      EPS.

      The 2018 Restated financials that consider the new rules on lease accounting were not restated for
      hyperinflation accounting for the periods ending 31 March 2018 and 30 June 2018. As a consequence, the
      1Q18 Restated results do not include any impact of hyperinflation accounting. Please refer to the 1Q18
      Reference Base for the results including the impact of hyperinflation accounting as well as the new rules
      on lease accounting for results up to Normalized EBIT.


      Reconciliation between profit attributable to equity holders and normalized EBITDA

      Figure 14. Reconciliation of normalized EBITDA to profit attributable to equity holders of AB InBev (million USD)
                                                                                               1Q18              1Q18      1Q19
                                                                                           Restated Reference Base
      Profit attributable to equity holders of AB InBev                                        1 019                       3 571
      Non-controlling interests                                                                  327                         311
      Profit                                                                                   1 346                       3 882
      Income tax expense                                                                         666                         723
      Share of result of associates                                                              - 57                        - 53
      Net finance (income)/cost                                                                1 577                         363
      Non-recurring net finance (income)/cost                                                    330                      -1 122
      Non-recurring items above EBIT (incl. non-recurring impairment)                              96                          45
      Normalized EBIT                                                                          3 960             3 955     3 838
      Depreciation, amortization and impairment                                                1 166             1 165     1 151
      Normalized EBITDA                                                                        5 126             5 120     4 989


      Normalized EBITDA and normalized EBIT are measures utilized by AB InBev to demonstrate the
      company’s underlying performance.

      Normalized EBITDA is calculated excluding the following effects from profit attributable to equity holders of
      AB InBev: (i) non-controlling interest; (ii) income tax expense; (ii) share of results of associates; (iv) net
      finance cost; (v) non-recurring net finance cost; (vi) non-recurring items above EBIT (including non-recurring
      impairment); and (vii) depreciation, amortization and impairment.

      Normalized EBITDA and normalized EBIT are not accounting measures under IFRS accounting and should
      not be considered as an alternative to profit attributable to equity holders as a measure of operational
      performance, or an alternative to cash flow as a measure of liquidity. Normalized EBITDA and normalized
      EBIT do not have a standard calculation method and AB InBev’s definition of normalized EBITDA and
      normalized EBIT may not be comparable to that of other companies.




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       NOTES
      To facilitate the understanding of AB InBev’s underlying performance, the analyses of growth, including all comments in this press release,
      unless otherwise indicated, are based on organic growth and normalized numbers. In other words, financials are analyzed eliminating the
      impact of changes in currencies on translation of foreign operations, and scope changes. Scope changes represent the impact of acquisitions
      and divestitures, the start or termination of activities or the transfer of activities between segments, curtailment gains and losses and year over
      year changes in accounting estimates and other assumptions that management does not consider as part of the underlying performance of
      the business.
      AB InBev has restated its 2018 results considering the new IFRS rules on lease accounting as if the company had applied the new standard
      as of 1 January 2018 and the new company organizational structure effective 1 January 2019 in line with IFRS rules. This presentation is
      referred to as “2018 Restated”.
      AB InBev has updated its 2018 segment reporting for purposes of result announcement. This presentation, referred to as the "2018 Reference
      Base", includes, for comparative purposes and to facilitate the understanding of AB InBev’s underlying performance, (i) the new company
      organizational structure effective 1 January 2019 (ii) the impact of hyperinflation accounting for the Argentinean operations as if the company
      had applied hyperinflation accounting as of 1 January 2018 and (iii) restated results considering the new IFRS rules on lease accounting as if
      the company had applied the new standard as of 1 January 2018.
      All references per hectoliter (per hl) exclude US non-beer activities. To eliminate the effect of geography mix, i.e. the impact of stronger volume
      growth coming from countries with lower revenue per hl, and lower Cost of Sales per hl, we are also presenting, where specified, organic
      growth per hectoliter figures on a constant geographic basis. When we make estimations on a constant geographic basis, we assume each
      country in which we operate accounts for the same percentage of our global volume as in the same period of the previous year. References to
      the High End Company refer to a business unit made up of a portfolio of global, specialty and craft brands across 22 countries.
      Whenever presented in this document, all performance measures (EBITDA, EBIT, profit, tax rate, EPS) are presented on a “normalized” basis,
      which means they are presented before non-recurring items and discontinued operations. Non-recurring items are either income or expenses
      which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for
      the understanding of the underlying sustainable performance of the Company due to their size or nature. Normalized measures are additional
      measures used by management and should not replace the measures determined in accordance with IFRS as an indicator of the Company’s
      performance. On 30 March 2018 the 50:50 merger of AB InBev's and Anadolu Efes' existing Russia and Ukraine businesses was completed.
      The combined business is fully consolidated in the Anadolu Efes financial accounts. As a result of this transaction, AB InBev stopped
      consolidating its Russia and Ukraine businesses and accounts for its investment in AB InBev Efes under the equity method, as of that date.
      Values in the figures and annexes may not add up, due to rounding.
      1Q19 EPS is based upon a weighted average of 1 979 million shares compared to a weighted average of 1 974 million shares for 1Q18.

      Legal Disclaimer

      This release contains “forward-looking statements”. These statements are based on the current expectations and views of future events and
      developments of the management of AB InBev and are naturally subject to uncertainty and changes in circumstances. The forward-looking
      statements contained in this release include, among other things, statements relating to AB InBev’s business combination with ABI SAB Group
      Holdings Limited and other statements other than historical facts. Forward-looking statements include statements typically containing words
      such as “will”, “may”, “should”, “believe”, “intends”, “expects”, “anticipates”, “targets”, “estimates”, “likely”, “foresees” and words of similar
      import. All statements other than statements of historical facts are forward-looking statements. You should not place undue reliance on these
      forward-looking statements, which reflect the current views of the management of AB InBev, are subject to numerous risks and uncertainties
      about AB InBev and are dependent on many factors, some of which are outside of AB InBev’s control. There are important factors, risks and
      uncertainties that could cause actual outcomes and results to be materially different, including the ability to realize synergies from the business
      combination with ABI SAB Group Holdings Limited, the risks and uncertainties relating to AB InBev described under Item 3.D of AB InBev’s
      Annual Report on Form 20-F (“Form 20-F”) filed with the US Securities and Exchange Commission (“SEC”) on 22 March 2019. Other unknown
      or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
      The forward-looking statements should be read in conjunction with the other cautionary statements that are included elsewhere, including AB
      InBev’s most recent Form 20-F and other reports furnished on Form 6-K, and any other documents that AB InBev has made public. Any
      forward-looking statements made in this communication are qualified in their entirety by these cautionary statements and there can be no
      assurance that the actual results or developments anticipated by AB InBev will be realized or, even if substantially realized, that they will have
      the expected consequences to, or effects on, AB InBev or its business or operations. Except as required by law, AB InBev undertakes no
      obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
      The first quarter 2019 (1Q19) financial data set out in Figure 1 (except for the volume information), Figures 3 to 5, 7, 9, 10 and 14 of this press
      release have been extracted from the group’s unaudited condensed consolidated interim financial statements as of and for the three months
      ended 31 March 2019, which have been reviewed by our statutory auditors PricewaterhouseCoopers Bedrijfsrevisoren/Réviseurs d’Entreprises
      CVBA/SCRL in accordance with the standards of the Public Company Accounting Oversight Board (United States). The auditors concluded
      that, based on their review, nothing had come to their attention that caused them to believe that those interim financial statements were not
      presented fairly, in all material respects, in accordance with IAS 34 “Interim Financial Reporting”, as issued by the IASB and as adopted by the
      European Union. Financial data included in Figures 6, 8 and 11 to 13 have been extracted from the underlying accounting records as of and
      for the three months ended 31 March 2019 (except for the volume information).




                                                                                                                                                     13

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       CONFERENCE CALL AND WEBCAST

      Investor Conference call and webcast on Tuesday, May 7, 2019:
      3.00pm Brussels / 2.00pm London / 9.00am New York

      Registration details
      Webcast (listen-only mode):
      AB InBev 1Q19 Results Webcast
      Conference call (with interactive Q&A):
      AB InBev 1Q19 Conference Call (with interactive Q&A)


       ANHEUSER-BUSCH INBEV CONTACTS

      Investors                                                              Media
      Lauren Abbott                                                          Pablo Jimenez
      Tel: +1 212 573 9287                                                   Tel: +1 212 573 9289
      E-mail: lauren.abbott@ab-inbev.com                                     E-mail: pablo.jimenez@ab-inbev.com

      Mariusz Jamka                                                          Ingvild Van Lysebetten
      Tel: +32 16 276 888                                                    Tel: +32 16 276 608
      E-mail: mariusz.jamka@ab-inbev.com                                     E-mail: Ingvild.vanlysebetten@ab-inbev.com

      Jency John
      Tel: +1 646 746 9673
      E-mail: jency.john@ab-inbev.com




      7 May 2019
      JSE Sponsor: Questco Corporate Advisory Proprietary Limited

      About Anheuser-Busch InBev

      Anheuser-Busch InBev is a publicly traded company (Euronext: ABI) based in Leuven, Belgium, with secondary listings on the Mexico
      (MEXBOL: ANB) and South Africa (JSE: ANH) stock exchanges and with American Depositary Receipts on the New York Stock
      Exchange (NYSE: BUD). Our Dream is to bring people together for a better world. Beer, the original social network, has been bringing
      people together for thousands of years. We are committed to building great brands that stand the test of time and to brewing the best
      beers using the finest natural ingredients. Our diverse portfolio of well over 500 beer brands includes global brands Budweiser®,
      Corona® and Stella Artois®; multi-country brands Beck’s®, Castle®, Castle Lite®, Hoegaarden® and Leffe®; and local champions
      such as Aguila®, Antarctica®, Bud Light®, Brahma®, Cass®, Cristal®, Harbin®, Jupiler®, Michelob Ultra®, Modelo Especial®,
      Quilmes®, Victoria®, Sedrin®, and Skol®. Our brewing heritage dates back more than 600 years, spanning continents and
      generations. From our European roots at the Den Hoorn brewery in Leuven, Belgium. To the pioneering spirit of the Anheuser & Co
      brewery in St. Louis, US. To the creation of the Castle Brewery in South Africa during the Johannesburg gold rush. To Bohemia, the
      first brewery in Brazil. Geographically diversified with a balanced exposure to developed and developing markets, we leverage the
      collective strengths of approximately 175,000 employees based in nearly 50 countries worldwide. For 2018, AB InBev’s reported
      revenue was 54.6 billion USD (excluding JVs and associates).




                                                                                                                                        14

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      Annex 1
      AB InBev Worldwide                            1Q18                    Currency     Organic              Organic
                                                            Scope                                     1Q19
                                          Reference Base                  Translation    Growth               Growth
      Total volumes (thousand hls)               134 831    -3 045                   -     1 676    133 462      1.3%
               of which AB InBev own beer        118 351    -2 519                   -     1 184    117 016      1.0%
      Revenue                                     13 090     - 161             -1 100        759     12 589      5.9%
      Cost of sales                                -5 004        47               380      - 298     -4 875     -6.0%
      Gross profit                                  8 086    - 113              - 721        462      7 714      5.8%
      SG&A                                         -4 318        52               336      - 105     -4 036     -2.5%
      Other operating income/(expenses)               186        -5               - 11       - 11       160     -5.9%
      Normalized EBIT                               3 955      - 67             - 396        347      3 838      8.9%
      Normalized EBITDA                             5 120      - 38             - 510        416      4 989      8.2%
      Normalized EBITDA margin                     39.1%                                             39.6%     86 bps

      North America                                 1Q18                    Currency     Organic              Organic
                                                            Scope                                     1Q19
                                          Reference Base                  Translation    Growth               Growth
      Total volumes (thousand hls)                24 814              -             -      - 292     24 522     -1.2%
      Revenue                                       3 460             -          - 20          39     3 478      1.1%
      Cost of sales                                -1 298         -   1             6        - 32    -1 326     -2.5%
      Gross profit                                  2 161         -   1          - 14           7     2 152      0.3%
      SG&A                                         -1 049             -             9          29    -1 011      2.8%
      Other operating income/(expenses)                 1             -             -          12        13          -
      Normalized EBIT                               1 112         -   1            -5          48     1 153      4.3%
      Normalized EBITDA                             1 322         -   1            -6          33     1 347      2.5%
      Normalized EBITDA margin                     38.2%                                             38.7%     51 bps

      Middle Americas                               1Q18                    Currency     Organic              Organic
                                                            Scope                                     1Q19
                                          Reference Base                  Translation    Growth               Growth
      Total volumes (thousand hls)                30 738      - 54                  -      - 171     30 513     -0.6%
      Revenue                                       2 705     - 28               - 91        125      2 711      4.7%
      Cost of sales                                 - 811     - 22                 27        - 18     - 824     -2.2%
      Gross profit                                  1 894     - 50               - 64        107      1 887      5.8%
      SG&A                                          - 798        8                 24          19     - 747      2.4%
      Other operating income/(expenses)                 6        2                  -           -         7     -3.9%
      Normalized EBIT                               1 102     - 40               - 39        125      1 148    11.8%
      Normalized EBITDA                             1 294     - 25               - 46        144      1 366    11.3%
      Normalized EBITDA margin                     47.8%                                             50.4%    302 bps

      South America                                 1Q18                    Currency     Organic              Organic
                                                            Scope                                     1Q19
                                          Reference Base                  Translation    Growth               Growth
      Total volumes (thousand hls)                34 088       167                  -      2 013     36 268       5.9%
      Revenue                                       2 861       10              - 704        452      2 618     15.9%
      Cost of sales                                -1 082       -9                226      - 173     -1 039    -15.9%
      Gross profit                                  1 778        1              - 478        279      1 579     15.8%
      SG&A                                          - 868       -7                199        - 57     - 734      -6.6%
      Other operating income/(expenses)                82       -2                 -9        - 10        61    -12.5%
      Normalized EBIT                                 992       -8              - 288        212        907     21.7%
      Normalized EBITDA                             1 257       15              - 358        223      1 137     17.6%
      Normalized EBITDA margin                     44.0%                                             43.4%      68 bps




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      EMEA                                          1Q18                Currency     Organic               Organic
                                                            Scope                                1Q19
                                          Reference Base              Translation    Growth                 Growth
      Total volumes (thousand hls)                20 549    -2 812               -       419    18 156         2.4%
               of which AB InBev own beer         19 051    -2 314               -       403    17 140         2.4%
      Revenue                                       1 919    - 137          - 151         42     1 673         2.4%
      Cost of sales                                 - 834        80             62      - 35     - 727        -4.7%
      Gross profit                                  1 085      - 57           - 89         7       946         0.7%
      SG&A                                          - 722        53             56      - 35     - 648        -5.3%
      Other operating income/(expenses)                49        -1             -3        -3        42        -6.7%
      Normalized EBIT                                 412        -5           - 36      - 31       340        -7.7%
      Normalized EBITDA                               660      - 19           - 56      - 17       569       -2.6%
      Normalized EBITDA margin                     34.4%                                        34.0%      -177 bps

      Asia Pacific                                  1Q18                Currency     Organic               Organic
                                                            Scope                                1Q19
                                          Reference Base              Translation    Growth                Growth
      Total volumes (thousand hls)                24 296          -              -     - 310    23 986       -1.3%
      Revenue                                       2 040         -         - 132          92    2 000        4.5%
      Cost of sales                                 - 870         -             55       - 32    - 848       -3.7%
      Gross profit                                  1 170         -           - 78         60    1 152        5.1%
      SG&A                                          - 622         -             38       - 11    - 595       -1.8%
      Other operating income/(expenses)                41         -             -2       - 11       28      -26.7%
      Normalized EBIT                                 589         -           - 42         38      586        6.4%
      Normalized EBITDA                               772         -           - 54         72      790        9.4%
      Normalized EBITDA margin                     37.8%                                        39.5%      176 bps

      Global Export and Holding                     1Q18                Currency     Organic               Organic
                                                            Scope                                1Q19
      Companies                           Reference Base              Translation    Growth                Growth
      Total volumes (thousand hls)                    346    - 346              -         16          16          -
      Revenue                                         106        -5            -2         10         109     12.2%
      Cost of sales                                 - 107         -             4         -8     -   111     -8.6%
      Gross profit                                     -1        -5             2          2          -2     40.0%
      SG&A                                          - 260        -2            10       - 50     -   303    -19.0%
      Other operating income/(expenses)                 8        -5             2          2           8     59.2%
      Normalized EBIT                               - 253      - 13            13       - 45     -   296    -16.8%
      Normalized EBITDA                             - 184        -8            10       - 38     -   220    -20.0%




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