Anheuser-Busch: Quarterly Profit Up

Anheuser-Busch Cos. Inc. (search), the largest U.S. brewer, said on Wednesday quarterly profit rose, but domestic market share slipped and the company forecast a tough year for growing profit in its beer business.

Rising costs and increased promotions to stimulate sales volume will weigh on profit in the beer business, Chief Financial Officer Randolph Baker (search) said in a conference call with analysts. The company forecast 2005 earnings per share growth of 6 percent to 9 percent, excluding one-time items, below its long-term goal of a double-digit increase.

The brewer has been in a fierce battle with SABMiller Plc.'s Miller Brewing (search) for U.S. market share.

"Our focus in 2005 is going to be to restore our volume growth momentum," Baker said.

The brewer said fourth-quarter net income rose to $332 million, or 42 cents a share, from $294 million, or 36 cents a share, in the same quarter last year.

Earnings per share for the most recent fourth quarter were helped by a 1.8 cent per share gain on the sale of its stake in Chilean brewer Compania Cervecerias Unidas and a deferred tax benefit of 1.2 cent per share related to its Mexican Modela investment.

According to Reuters Estimates, analysts had forecast, on average, earnings per share of 39 cents -- excluding one time items.

Anheuser said fourth quarter gross sales rose to $3.9 billion from $3.7 billion. Net sales, which exclude the impact of excise taxes, rose to $3.4 billion from $3.2 billion.

The earnings per share forecast for 2005 was also lower than the company had first forecast in the fall.

"This is 100 basis points lower than the original range that A-B gave in October of 7 to 10 percent. Our current '05 EPS growth is 6.4 percent," said Citigroup analyst Bonnie Herzog.

"We would not have expected management to announce a reduction in its 2005 guidance so early in the year, but this confirms our thesis that the pricing environment that once long buoyed earnings could be challenging this year."

The year will be "a difficult year for beer segment profit growth," Baker told the conference call.

Anheuser-Busch expects revenue per barrel to be up 1.5 percent to 2 percent in 2005, with domestic shipment volume up 1 percent or more, Baker said.

Worldwide beer sales volume for the fourth quarter rose 8.8 percent to 27.6 million barrels.

The brewer said the pricing environment continued to be "favorable" as a result of which domestic beer revenue per barrel increased 2.3 percent in the fourth quarter and grew 2.5 percent for the full year.

It said it completed the first stage of its pricing plan for 2005 in October 2004 and the second phase would be implemented this week.

But Anheuser-Busch said its domestic market share, excluding exports, for the full year 2004 was 49.6 percent, compared with 2003 market share of 49.7 percent.

Sales-to-retailers were down 3.2 percent, hurt by abnormally wet weather in many markets, especially during the key summer selling season. The brewer also noted a general slowdown in consumer spending during the year, particularly among lower income consumers.

"We expect (Anheuser) to post decelerated net revenue per barrel growth as it seeks to help its volumes rebound, but we are also sure both A-B and number-two Miller have made increased commitments to marketing spend that necessitate pricing in-line with inflation," said Mark Swartzberg, an analyst at Legg Mason.

"Such pricing is also consistent with larger consumer realities, in our view."

Anheuser-Busch shares nosed into positive territory just after the results and were up almost 0.2 percent at $49.37 by the close on the New York Stock Exchange.