Anheuser-Busch Profit Fueled by Price Rises

Top U.S. brewer Anheuser- Busch Cos Inc. (BUD) Wednesday said quarterly profit rose as the company increased prices on its beers and consumers bought high-end brands.

The maker of brands such as Michelob Ultra (search) and Budweiser also said it was raising its quarterly dividend 11.4 percent to 24.5 cents.

But the company trimmed its earnings-per-share growth forecast to 11.7 percent, excluding a $19.5 million gain from the sale of commodity hedges the company recorded in the first quarter, from 12 percent.

The results were in line with expectations, but the company still has some work to do to match its performance of a year ago in the upcoming quarters, Legg Mason analyst Mark Swartzberg said.

"I do think that there is enough here to cause people to pause for a while," said Swartzberg, who has a buy rating on the Anheuser-Busch's shares.

Price increases will continue to be a key ingredient of the company's profit growth going forward.

Anheuser-Busch, which saw the revenue it gained from each barrel of beer sold in the United States rise 2.5 percent during the quarter, said it planned another round of price increases in the fourth quarter. The company did not say, which brands and markets it will target for price increases.

The company reported a second-quarter profit of $674 million, or 83 cents a share. This compares with net earnings of $633 million, or 75 cents a share, last year.

Analysts were expecting earnings per share of 82 cents to 84 cents, with an average estimate of 83 cents, according to Reuters Estimates.

The company said gross sales rose to $4.60 billion from $4.34 billion. Net sales, which include the effect of excise taxes, rose to $4.01 billion from $3.77 billion.

The volume of Anheuser-Busch beer sold rose 2.2 percent in the second quarter. In the United States, the St. Louis-based company's biggest market, volume rose 1.9 percent.

Anheuser-Busch recently paid $692 million for China's Harbin brewery (search) to capitalize on that country's growing economy. The company, which plans to incorporate Harbin's results into its financial statements staring in the third quarter, said it expects the deal to cut into earnings per share by 1 cent during 2004.

The brewer's shares rose 50 cents to $52.40 on the New York Stock Exchange (search).