[Technical Difficulty] Are Mr. Carlos Brito, Chief Executive Officer; and Mr. Fernando Tennenbaum, Chief Financial Officer. To access the slides accompanying today's call, please visit AB InBev's website at www.ab-inbev.com and click on the Investors tab and the Reports and Results Center page. Today's webcast will be available for on-demand playback later today. [Operator Instructions]. 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 23rd of March 2020. AB Inbev assumes no obligation to update or revise any forward-looking information provided during the conference call and shall not be liable for any action taken in reliance upon such information. It is now my pleasure to turn the floor over to Mr. Carlos Brito. Sir, you may begin.

Thank you, Maria, and good morning, good afternoon, everyone. Welcome to our first quarter 2020 earnings call. I hope you and your families are all safe and well in this unprecedented times. First and foremost, I'd like to extend our deepest sympathies to everyone who has been affected by the COVID-19 virus. I want to express our sincere gratitude to those on the front lines for their commitment to keeping us safe, particularly to the health care workers around the world. I'd also like to personally thank our colleagues for the work they're doing to ensure business continuity during these volatile times. The global COVID-19 pandemic has altered life as we know it. However, it has not changed our purpose at AB InBev: to bring people together for a better world, even if being together looks much different now. Today, I'll briefly discuss the results of the first quarter, but I'll spend more time providing an update on our business in light of the COVID-19 pandemic. I'll then hand it over to our new CFO, Felipe -- Fernando Tennenbaum, who'll address our financial results and the measures we have taken to exercise financial discipline in a time of significant uncertainty and volatility. We'll then be happy to answer your questions. Our business started the year with good momentum. We delivered volume growth of 1.9% in the first 2 months of the year excluding our business in China where the COVID-19 outbreak began in late January. The impact of the pandemic on our global results increased significantly toward the end of the quarter, leading to a volume decline of 3.6%, excluding China, and a total volume decline of 9.3%. Beer volumes declined by 10.5%, while non-beer volumes declined by 0.2%. Revenue declined by 5.8% in the first quarter as the volume…

Thank you, Brito. Good morning, good afternoon, everyone. It is a pleasure to be doing my first AB InBev earnings call as CFO. I hope you are all safe and well. Let's start with an update on our net finance costs. Net finance costs in the quarter were $3.16 billion compared to $366 million in the first quarter of 2019. This increase was predominantly driven by mark-to-market losses linked to the hedging of our share-based payment programs of nearly $1.9 billion compared to a gain of nearly $1 billion in the first quarter of 2019. Interest expenses were lower by nearly $80 million. Our normalized effective tax rate, or ETR, was minus 109.3% this quarter as it was heavily impacted by the nondeductible mark-to-market losses linked to the hedging of our share-based payment programs. Excluding the impact of the gains and losses linked to the hedging of our share-based payment programs, our ETR in the first quarter was 25.9% as compared to 27.5% in the first quarter of 2019. The decrease is primarily driven by lower property and country mix. Moving on to earnings per share. Our underlying EPS decreased to $0.51 per share in the quarter as the decline in normalized EBIT was only partially offset by lower tax expense and lower profit attributable to noncontrolling interests. Let me now spend a few minutes on the measures we are taking to exercise our financial discipline. Our commitment to financial discipline is unwavering, especially in the context of the current volatility. We are proactively managing those factors upon which we can have impact and influence. Efficient utilization of our resources is part of our DNA and an important driver of our industry-leading profitability. We had implemented several measures to reduce or eliminate discretionary expending that may not prove effective in…

[Operator Instructions]. Our first question is coming from Trevor Stirling of Bernstein.

Brito and Fernando, one question and a follow-up from me, please. The 2 are -- firstly, in the U.S., Brito, you alluded to the off-trade strength that we've seen in March and also extending into April. I was wondering if you could give us any thoughts around the sustainability of that off-trade strength and the extent to which it's actually offsetting the on-trade weakness. And the second question, in Brazil, you mentioned that you underperformed in premium this quarter. I think the Brazilian premium volumes actually declined in 1Q according to the AB InBev release. And I wonder if you can give us a bit more color on why you're doing a lot of activity in premium, but it doesn't seem to be quite delivering yet.

Trevor, thanks for the question. So first on the U.S. off-trade. Because of the stay-at-home order, social distancing and everything, the on-trade was brought to a shutdown, and consumers had to come up with more activities at home. So meals at home became something that was more important than before. Everybody was having their meals at home. Restaurants were closed, and lots of other things start to happen in the home. So with that, the off-trade saw a pickup in volumes in the onset of the crisis. So we observed that uplift in beer sales, especially on bigger packs and also known brands. So it's proportionally benefiting established brands. It's too early now to determine if this trend will demonstrate a longer-term shift in consumer behavior. But at this time, that's what we saw. It's also good to just make an observation here about the performance in Q1 in the U.S. in which net revenue grew by 1.9%; EBITDA, 2.7%; and net revenue per hectoliter, 3%. So it was a very strong quarter. And so that's for the U.S. off-trade. In terms of Brazil premium, a couple of things. First, our premium segment posted double-digit growth in January and February. March then, with all the restrictions, it was a different story. Second, our premium brand portfolio has grown every year for more than a decade. And we continue to believe that the best way to position itself to win in the long term in the premium segment is with the portfolio of brands to which we're adding back as an import-style international premium pure malt brand. And it's also good to remember that we have more than 50% of that segment. I wouldn't take 1 quarter as a signal, but it's true that we under-share. We're under-shared in that segment, and that's something that we still have to solve. But we believe the portfolio approach and we have very strong brands. Thank you.

Our next question comes from the line of Edward Mundy of Jefferies.

Brito, Fernando, two questions as well, please. First question is how do you weigh up your strong liquidity situation and extend the debt maturity schedule versus potential for an accelerated deleveraging program as we saw back in 2008? And then my follow-up question is around COGS per hectoliter. Coming into fiscal '19, you have been guiding for COGS per hectoliter to increase by about mid-single digit. It feels like spot prices are probably starting to come down, but the transaction hedging is probably worse for next year. Should we think about COGS per hectoliter in 2021 to be better or worse at this stage relative to fiscal '20?

Okay, Ed. So let's start with the first one. So in terms of liquidity, we feel very good about our position. I mean, that's the first thing we did when we saw the crisis hitting. We ended 2019 with $7 billion in cash. And then we went for bond issuances in April, €4.5 billion and $6 billion, so $11 billion approximately in total. We also withdrew the totality of our revolver, $9 billion. And this morning, we just got confirmation that we got the firm approved in Australia. So all conditions for closing are checked, and the transaction will close on June 1. When we put all this together, the liquidity, we are in a very comfortable position. In terms of leverage, our capital allocation priorities are the following. The first priority is the use of cash behind growing our brands on our organic business. The second one is to deleverage to around 2x net debt-to-EBITDA. This remains our commitment. And we'll continue to prioritize debt repayment in order to meet this objective. The third one is about M&A. And the fourth one is to return excess cash to shareholders. With this being said, we must -- we exercised -- we were very prudent and continue to be prudent and including the efficient management of discretionary expenditures. So when this crisis hit, we looked at everything that was discretionary and could be phased out and we took that decision, along with the dividend revision from €1 to €0.50. So the leverage continues to be high on our agenda. And this morning, the CUB Australia announcement and the certainty of closing on June 1 was very good. In terms of cost of sales, we had 2 impacts in this first quarter. First, I mean, the -- if you look at commodities and foreign exchange, this is a quarter this year that will continue to have that hit; and second, because of the operational deleverage. So if you look at our 10.3% COGS or cost of sales per hectoliter escalation in the first quarter, 33% of that came from the operational deleverage, so having less volume to dilute fixed costs. And 25% of it came from commodities and FX. The balance would be inflation and brand and package mix. That's always part of the equation. So again, more than half -- slightly more than half coming from FX, commodity and the volume deleverage. For 2021, very hard to predict. It is true that we have our hedges in places. So we're always trying to hedge 12 months on a rolling basis. But at this point, things are very fluid. What we can say for this year is that on the transactional piece, we are hedged for this year. But for next year, we're in the process of doing that. And of course, we'll have to continue to follow the situation in terms of currencies and commodities in general. Thank you.

Our next question comes from the line of Sanjeet Aujla of Crédit Suisse.

A couple of questions from me also. Firstly, Brito, can you just go into a bit more detail as to what you're seeing in the off-premise channel in those less restrictive developing market clusters, so Brazil and Colombia? Are you seeing any growth in the off-premise there? Or is that channel also declining? And then my follow-up is, just coming back to the smart affordability strategy that you started really talking more about last year. Is there any changes to that just in light of the material FX headwinds that we've seen, which will clearly impact from a transactional standpoint going into next year? Does that make you think any differently about that and the associated margin impact?

Well, first on the off-trade on less restrictive markets like Brazil and Colombia, for example. What we've seen in terms of trends on how consumers are behaving during COVID is that there is an increase in in-home consumption. People buy more in the local store in the neighborhood because they cannot fully move in many places. Core brands are showing more resilience because people are going for bigger packs of known, established brands. A lot of things going digital in terms of order and entertainment and also cans increased in terms of the pack mix. So yes, it is true that off-trade is more resilient and stronger, as I stated a little bit. But in countries like Brazil and Colombia, the on-trade is so significantly that the off-trade uplift is not nearly enough to compensate. There is difference from the first cluster of markets where the on-trade is very small, like Brazil -- like the U.S. as Europe, and where the off-trade can, in large part, compensate for the on-trade shortfall. In terms of smart affordability, we -- I would like to step back and go to the category expansion framework. In the category expansion framework, what we learned is that you should have a portfolio to cater both sorts of price points and all sorts of consumers. So the smart affordability continues to be part of our portfolio. So there's no change there. And let's remember that with local crops, because of the excise tax break we have, the margins are very comparable to the core brand. So they're very profitable compared to the average of the company. So that's what I -- yes, that's it.

Yes. Just a quick follow-up, if I can, quickly, Brito, on China. You talked about an impact also in the off-trade channel in Q1. I'm just curious as you're going into April, I appreciate the on-trade channel isn't quite back to normal. But are you seeing any pickup in the off-trade channel within China yet?

Yes. In China, what's happening, Sanjeet, is that different channels are reopening at different speeds. So the in-home, of course, was mostly open during the whole time because people needed to have access to food. So that remains true. Then the Chinese restaurants reopened faster than the nightlife, for example. And so channels are beginning to attract customers back to old habits, to old ways of consuming beer. But in-home, and especially e-commerce and delivery, remains very strong. So that's what we see. Also, going back to your first question on Brazil and Colombia, we have developed some ways to get beer to consumers' homes. You saw in the presentation about Tienda de Circo in Colombia and Zé Delivery in Brazil. So those things we have developed in the last 5 years, and they've proven to be very handy in markets like Brazil and Colombia where the on-trade is very important and where home delivery is growing very fast. So these things that have been developed in the last 5 years came handy now with the e-commerce and direct delivery being much more relevant.

Our next question comes from the line of Celine Pannuti of JPM.

My first question is on -- a bit technical, maybe on the Mexico and Peru. Can you confirm where you will be -- if you know whether we will be able to brew again from June? And how much inventory do you need to replenish the trade with? And how long would it take for you to do that on top of your normal production? And then my second, just as well staying on Latin America, a follow-up. We've seen a lot of FX pressure from many of the Latin American countries, and we are going to see recession hitting those economies almost all at once. What kind of environment are you preparing in terms of the second half and next year? And would it be fair that you will have limited ability for price recovery? And hence, whether we should -- how you think about this on a mid-term basis for your profitability?

Thank you. In terms of Mexico and Peru, yes, so our beer operations are restricted so we cannot operate. Peru, in the last few weeks, gave us permission to sell the existing inventory. What is true in both countries is that we have enough inventory for when the recovery comes that we're able to supply our customers in a very fast way. In Mexico, for example, the partners are able to sell existing inventory that they have with them. But after the Easter vacation, which in Mexico is a very strong consumption period, there's pretty much no inventory left in the marketplace. But there's a lot of pent-up demand in the market. So the moment we can use our inventory that sits in our breweries and our warehouses, distribution centers, it's going to be very fast to replenish the inventory to the trade. Same in Peru. In terms of Lat Am FX, as you know, Lat Am is a place where our people are very used to crisis from time to time. And they know exactly what to do in terms of being ready for a tough few months, a few years. We've done that many times in the past. So we're going to do it again by looking at structure, by looking at discretionary spend, by trying to reallocate resources to channels that are growing, taking it from channels that are more under pressure, by using our portfolio to our advantage and also by using technology. Now we have B2B that even without the presence of our sales rep, partners and can get their orders to us. We have direct delivery to customers' home, consumers' homes, all those things. And on top of that, all those things will come handy. And on top of that, the hedge policy that we have in place for transactional cost exposure that are dollar-denominated, they -- pretty much this year is hedged for those exposures. So that will give us times to plan or price increases that will be necessary going forward. So that's why we do hedge, so we have time to plan. And we can read the market, try to understand tax, brands, regions, channels and plan a price increase accordingly. Thank you.

Our next question comes from the line of Olivier Nicolai of Goldman Sachs.

Brito, Fernando, just one question and one follow-up, please. Could you give us a few examples, in the U.S. market specifically, on the measures you're taking to protect your margin? And just a quick follow-up on the capital structure. I mean, ABI clearly has no liquidity issues, as we've seen from your prioritization, a new refinancing and then the announcement we see you this morning. But I was just wondering how you're planning to optimize your capital structure in the medium term? You reduced the dividend already. Can we expect a CapEx reduction? Can we expect more noncore disposals? Or should we just assume that the bulk of that net debt-to-EBITDA reduction will come through EBITDA growth? Obviously, for the medium term, not asking for a guidance for this year or next year.

Well, in terms of the U.S. in terms of measures to protect our margins, we're doing everything we -- I just mentioned in Brazil. So we're looking at discretionary spend. We're taking a hard look at sales and marketing, at CapEx -- the OpEx and CapEx, and trying to put the money in channels and products that consumers are demanding more. So trying to put more money behind e-commerce initiatives, direct-to-consumer initiatives. More money for ensuring the off-trade, more money behind bigger packs; trying to promote less because today, there's no need for that; trying to phase out some product new introductions, innovations because at this point, it doesn't make sense to do introductions; trying also to curb some media spend and put more online; so trying to be more in tune with consumers and trends so we allocate resources in a more effective way. So it's a big time something we're doing. In terms of capital structure. Again, the capital allocation priorities are clear. So the first priority will continue to be to invest money behind our business. U.S. business is doing very well. You saw the first quarter, Olivier. Second is to deleverage. We have a target of getting to 2x net debt-to-EBITDA. This remains our commitment. And we'll continue to prioritize debt repayment in order to meet this objective. And third is M&A. And fourth, giving money back to shareholders. So with this being said, we must exercise prudent measures during these times of uncertainty, volatility, including efficient management of discretionary expenditures that may prove not effective in this current environment. So we continue to be very prudent, continue to be making decisions that are consistent with our financial discipline and deleveraging commitments to navigate this environment. So we will always take our asset base. We've always reviewed it every year to identify noncore assets that can be divested as part of our normal business operations. So at this stage, there are no major divestments plans to highlight. But this is the kind of review we do every year.

And just to add here, in the short term, we are likely to maintain a large cash position, which is prudent given the current volatility. And as we see the crisis passing away, then the idea is to deploy this cash to redeem short-term maturities. So all the near-term maturities, we're going to be tackling that.

The other thing, Olivier, just on the U.S., our industry-leading margins also provides us with more flexibility in times like this. So our industry-leading margins is also a very important component on how to weather storms like this.

Our next question comes from the line of Simon Hales of Citi.

Brito, Fernando, two for me as well, please. Brito, can I just sort of come back on those cost-mitigation points you were talking about there? Clearly, now as a business, you've been at the forefront of driving efficiency out of the organization over many, many years. When we look at really where you're targeting these short-term savings, should we really be thinking about the variable marketing spend really taking up the lion's share of those possible synergies? I imagine the fixed costs element of your SG&A expenses excluding marketing are very high and probably difficult to address at this stage. Is that right? Is there any more color you can give me to help me think about the opportunity that you've got to address the cost base there? And maybe secondly, just going back to China and just particularly the Budweiser brand. Could you talk a little bit more about the performance of Budweiser outside the U.S., but particularly in regards to China through the quarter, perhaps how things have developed as we've been through March and into April?

Okay, Simon. So in terms of cost mitigations, I mean if there's one thing that's very -- an integral part of our DNA is the idea of doing a very efficient resource allocation. And you're right. During times like this, you look at everything that's discretionary: sales and marketing, CapEx, travel, meetings, trainings. We do have a hard look. It's not that we're not investing in sales and marketing, but for sure, we invest in channels that makes sense and not invest in others that are like the on-premise. We're also looking at structure in the sense that we are redeploying people to activities that are more needed. So if there's more activity in the off-trade, we're getting people from the on-trade, putting them in the off-trade. If there's more activity in the commerce, we're trying to staff accordingly. So this is a very dynamic process, one that we're very used to. So these are times when our culture really rises to the challenge because resource allocation is something that we believe, and we're very agile in doing it. In terms of Budweiser in China, Budweiser remains the #1 brand for the premium segment in China. It's a very strong franchise. Suffered, of course, as all brands suffered with the shutdown -- complete shutdown of China in February. And it's coming back now to life. Has a little bit of a lag compared to other parts of our portfolio because the nightlife is recovering, yes, but at a slower pace. Those are more sophisticated parts where the social distancing is harder to manage. So they are reopening, but not at the same pace as the in-home channels or the Chinese restaurant channel. But as they reopen, Budweiser benefit big time. The other thing we can see in China is that our Super Premium segment is -- with all this restriction, continues to grow in every channel and continue to outperform other segments and continue to grow its contribution across our portfolio. So again, Budweiser -- the brand Budweiser continues to be the #1 position in the premium segment in China. It continues to be very strong. In the night life, of course, a very important channel for Budweiser, and that's coming back as well with a little bit of a lag compared to other channels.

That's very helpful. Could I just sort of ask, are you able to give us some idea of how big that sort of addressable variable cost base is that you're sort of targeting at the moment, please?

No. At this point, we don't have an external number to mention. But you can be assured that we're doing everything we can to turn variable -- fixed costs into variable costs and to reallocate costs where they are more effective given the current circumstances and given current consumer trends.

Our next question comes from the line of Tristan Van Strien of Redburn.

Just two. One, just on South Africa. This is -- you've now had to actually, I think, the seventh consecutive quarter of very strong margin compression that we have seen. And even if we look beyond COVID, I mean have we started bottoming at this point? And what is the path to recovery of that margin, which I think, on my numbers, is the lowest in 15 years in South Africa? The second question is, one thing that's become very clear on your statement is you guys are quite an agile organization. So a lot of quick changes that you did. Are there any management routines, behaviors, systems that you think will be more permanent as we go back to the new normal?

Well, Tristan, in terms of margin, I mean, first, let's say, we're very happy with our performance in South Africa. I mean if you look at our first quarter, our volume grew by low single digits. And that's already many quarters we're back to volume growth -- strong volume growth. Same with net revenue. And net revenue per hectoliter also grew by low single digits. So in terms of margins in South Africa, this has a lot to do with our higher cost of sales per hectoliter, due to the premium mix, as well as some phasing in the cost of sales in first Q '19 that will normalize over the year. Also, we had increase in sales and market investments behind our growing premium brand portfolio and on-trade programs. So we're here for the long term, so we invested for the long term. And we also implemented some price moderation strategy on one of our brands, the biggest brand, Carling Black Label, in March '19, which drove double-digit volume growth. So we think those are important metrics with some pain in the short term. But we believe those are very, very good for the long term, and we're in this business for the long term. I would not take this as a sign that margins in South Africa are permanently under pressure. I think we did some adjustments. And we also have some commodity and FX pressure. But in our view, this will be conducive to a better future in terms of portfolio rebalancing and more of a balanced top line growth. In terms of management routine, what became clear to us is that consumer trends that were already there are being accelerated in a big way, be it e-commerce, doing more activity as a home, larger packs. Super…

[Operator Instructions]. Our final question will come from the line of Robert Ottenstein of Evercore ISI.

Brito, my understanding is that you're a very target-driven organization. The targets are developed the prior year, I don't know, November, December, and cascade down from you right through the organization. And they're generally full year targets. Given the incredible changes that have happened, I mean, it's a whole new world today. And it's not only a whole new world today, but it could be a whole new world three months from now, 6 months from now. And tremendous volatility, changes from governments that have huge impacts that are very different country-by-country and hard to predict. In that kind of environment, given your target-driven structure, how do you empower local flexibility and agility to best execute?

That's a very good point, Robert, because you're right, targets are important. But even more important than targets is common sense and priority setting. So when this whole crisis started, we set out priorities to our people that were very clear from day 1. We said priority #1: safety of our people. Second, we have to be part of the solution for communities. We have to help communities deal with the kind of pandemic they're dealing with. Third, we have to keep our business operating as long as we have the permits and we operate in a safe manner. So business continuity. Fourth, we have to prepare as we learn more through the crisis for a strong recovery. Five, we need to understand consumer trends and what the future will look like so we can adjust our strategy and company and structure to what's to come. And on top of all that, we need to keep a very strong liquidity. So people are very clear from the very beginning of this pandemic on where our priorities were. And because we have an LE system that we do every month, the last estimate for the next few months, that became more the North Star than the original targets. And now in June, July, after we see countries reopening in May and June from what governments is saying, and that can change, we're going to do a review of targets in light of more information we'll have then. But for now, the priorities are very clear, and the LE is our North Star.

And ladies and gentlemen...

Any more questions, Maria?

No. That was our final question.

Okay. So thank you, Maria. Let me just say a couple of things to finish the call here. So in these uncertain times, it's important to focus on what we can influence and impact. We're committed to protecting the health and safety of our people, supporting our local community and connecting with our customers and consumers in innovative ways. We're in this together, and we'll continue doing our part. Our culture is as strong as ever. And our people are stepping up with the passion and commitment of two owners. We're privileged to lead the global beer category, a category that has existed for centuries through many crisis. And we'll continue to thrive long after the current crisis is behind us. In closing, I'd like to say thank you. Thank you to those on the front lines, to their commitments, to keeping it safe, especially the health care workers around the world. And thank you to our teams for working with tremendous agility, resilience and dedication, especially those on the ground, in the front line, ensuring business continuity in these challenging times. I'm so proud to be your colleague. Thank you for joining the call today. I hope you and your family stays safe and healthy. We hope to celebrate a strong recovery over a beer soon. Thank you very much. Have a great day. Bye-bye.

Thank you. This does conclude today's earnings conference call and webcast. Please disconnect your lines, and have a wonderful day.