Anheuser-Busch Cos. Inc. (BUD), the largest U.S. brewer, Wednesday reported a 39 percent drop in fourth-quarter earnings, citing weak domestic beer sales and higher packaging and energy costs.

The earnings came in below expectations and failed to ease the uncertainty regarding 2006, wrote Morgan Stanley's Bill Pecoriello in a research note.

The company, whose brands include Budweiser and Michelob, posted fourth-quarter earnings of $201 million, or 26 cents a share, compared with $332 million, or 42 cents a share, a year earlier.

Per-share profit was a penny below analysts' average forecast of 27 cents a share, according to Reuters Estimates.

The company said fourth-quarter sales were nearly unchanged at $3.365 billion from $3.367 billion a year earlier.

Wall Street was expecting revenue of $3.35 billion, according to Reuters Estimates.

"We've had a challenging year in the domestic beer business and our 2005 sales and earnings per share were disappointing," said Patrick Stokes, the brewer's president and chief executive officer.

Anheuser-Busch said domestic revenue per barrel decreased 2.7 percent in the quarter from a year earlier due to the deferral of price increases in a number of markets until early 2006 and higher promotional activities.

Total volume rose 9.1 percent but volume in the company's key U.S. market rose just 0.8 percent.

The U.S. beer industry has suffered in recent years as consumer tastes have shifted toward cocktails and wine, which had forced Anheuser-Busch to offer multiple discounts to try to drive volume higher.

But last October the company said it planned to reverse its price cuts in a bid to generate stronger revenue growth.

The company on Wednesday affirmed its plans for moderate price increases and discount reductions in the United States.

The stock was down 0.2 percent at $41.35 on the New York Stock Exchange.

Shares of Anheuser-Busch have fallen 3.3 percent this year, while the S&P 500 index, which includes Anheuser-Busch's stock, is up about 2.5 percent for the same period.

The stock trades at 16.8 times 2006 expected earnings, a premium over smaller rival Molson Coors Brewing Co., which carries a 13.8 price-to-earnings ratio.