OREANDA-NEWS. Revenue growth: Revenue grew by 8.9% in the quarter. This result was due to growth in total volumes of 4.4%, with revenue per hl also growing by 4.4%, driven by our revenue management and premiumization initiatives. On a constant geographic basis, revenue per hl grew by 5.7%

Volume performance: Our own beer volumes grew by 4.5%, driven by volume growth in all four of our top markets, while non-beer volumes grew by 3.0%. In the US, sales to wholesalers (STWs) grew by 2.1%, due to contingency planning in advance of labor negotiations, while selling day adjusted sales-to-retailers decreased by 2.6%

Focus Brands: Volumes of our Focus Brands grew by 6.0%, led by the Bud Light family and Michelob Ultra in the US, Corona in Mexico, Skol, Antarctica and Brahma in Brazil, and Budweiser and Harbin in China. Our three Global brands, Budweiser, Corona and Stella Artois, grew collectively by 8.3%

Cost of Sales (CoS): CoS increased by 2.0% in 1Q14, but decreased by 2.2% on a per hl basis, driven by lower commodity prices and production costs, especially in North America, Mexico and China, partly offset by foreign exchange transaction headwinds in Brazil. On a constant geographic basis, CoS per hl increased by 0.1%

EBITDA grew by 10.8% to 3 880 million USD with a margin expansion of 63 bps, driven by strong top line growth and a good cost of sales performance, partly offset by increases in sales and marketing investments

Net finance costs: Net finance costs (excluding non-recurring net finance costs) were 866 million USD in 1Q14 compared to 255 million USD in 1Q13, with the increase being driven primarily by the negative impact of the mark-to-market adjustments linked to the hedging of our share-based payment programs, as well as negative currency results and other hedging costs

Income taxes: Income tax in 1Q14 was 419 million USD with a normalized effective tax rate (ETR) of 18.8%, compared to an income tax expense of 333 million USD in 1Q13 and a normalized ETR of 13.3%. The normalized ETR in 1Q13 was favorably impacted by the non-taxable nature of gains from derivatives related to the hedging of our share-based payment programs

Profit: Normalized profit attributable to equity holders of AB InBev was 1 416 million USD in 1Q14 compared to 1 853 million USD in 1Q13. This decrease was driven primarily by a difficult 1Q13 comparable in net finance costs

Earnings per share: Normalized earnings per share (EPS) decreased to 0.87 USD in 1Q14 from 1.16 USD in 1Q13.

Management comments

Our focus remains one of driving top line growth. As a result, in 2014 we are further increasing investments behind our brands, supported by strong execution in the field. We are pleased with the results for the first quarter, which provide a solid foundation for the rest of the year.

Total revenues in 1Q14 grew by 8.9%, with total volumes, and revenue per hl, both growing by 4.4%.

Good volume performance in all four of our top markets, despite the later timing of the Easter holiday, which will favor 2Q14 volumes in the US, Mexico and Brazil:

In the US, STWs grew by 2.1%, driven by contingency planning in advance of labor negotiations. Selling day adjusted STRs declined by 2.6% in the quarter, driven mainly by challenging winter weather and the later timing of Easter

Volumes in Mexico grew by 0.9%, with an industry recovery and growth in our Focus Brands, particularly the Corona family and Bud Light

Brazil beer volumes grew by 10.9%, benefiting from an easier comparable versus last year, good summer weather and a later Carnival holiday this year. A lower level of food inflation compared to 1Q13 also helped to reduce pressure on consumer disposable income

China volumes grew by 9.4%, driven by our strongest Chinese New Year campaign ever

The performance of our Focus and Global Brands was very strong in the first quarter. Volumes of our Focus Brands grew by 6.0%, while our three Global brands grew by 8.3%, led by Corona with growth of 10.5%, Budweiser with growth of 7.8%, and Stella Artois with growth of 5.2%.

Consolidated EBITDA grew by 10.8% in 1Q14 versus the same period last year, with margin expansion of 63 bps. The strong revenue performance, supported by a good cost of sales result, more than offset the increase in sales and marketing investments.

We have confidence in the long term potential of our brands and are encouraged by the strong start to the year. We will continue to invest behind our brands with our attention now turning to the 2014 FIFA World Cup tournament which gets underway in Brazil, in June. This event provides an exciting opportunity to build brand equity and drive volume and revenue, not just in Brazil, but in many of our markets around the world.

On 1 April we completed the re-acquisition of Oriental Brewery ("OB"), the leading brewer in South Korea. AB InBev has a great history with OB, and we welcome back the management team to the AB InBev family. OB was already enjoying good momentum prior to the sale in 2009, and the team has continued to build-upon this platform, making Cass the number one beer brand in the country, supported by a healthy consumer brand preference. Cass has now become the Official Beer Sponsor of the 2014 FIFA World Cup for South Korea.