E-Malt.com News article: USA: Anheuser-Busch executives optimistic about growth outlook

Management continues to expect accelerated sales and earnings growth in the second half of the year and earnings per share growth for the full year to exceed its 7 to 10 percent long-term objective, Anheuser-Busch executives told investors in a presentation given at the Lehman Brothers Consumer Conference, according to company’s press release, September 6.

“We are adapting our portfolio and entire system to meet the demands of a changing marketplace and we are making good progress at strengthening our company’s foundation for sustainable long-term growth,” said August A. Busch IV, president and chief executive officer of the company.

U.S. beer industry volume in 2006 and year-to-date has grown at a healthy pace. Over this period, import and craft beers in particular have enjoyed strong growth and Anheuser-Busch has added considerably to its portfolio and presence in these growing segments through alliances, acquisitions and new product development. The company has also been leveraging its superior distribution system to pursue high-margin growth opportunities in non-alcohol beverages, such as energy drinks and super-premium waters.

While Anheuser-Busch’s U.S. beer sales-to-retailers were below expectations in the first half of the year, volume trends have shown improvement in the second half. So far in this quarter, total sales-to-retailers are up 2.4 percent, with both new brands and core brands contributing to growth.2/

The pricing environment in the U.S. beer industry also was cited as favorable. Anheuser-Busch’s revenue per barrel was up 2.7 percent in the first half of the year,3/ benefiting in part from improved portfolio mix, and is expected to significantly exceed this level of increase for the second half of the year. The company is planning to increase prices on the majority of volume early next year, with some increases coming in the fourth quarter of this year. In addition, management continues to aggressively pursue productivity improvement, targeting $300 to $400 million in cost savings over the next four years.

Busch also provided highlights of the company’s international beer business. Net income from international beer has grown an average of 20 percent per year since 1999. The majority of international beer profits are driven by the company’s 50 percent investment in Grupo Modelo, the leading brewer in Mexico and the brewer of Corona, the leading U.S. import brand. Modelo's new Crown import joint venture is significantly enhancing Anheuser-Busch’s equity income growth this year. Elsewhere, Anheuser-Busch is building a solid leadership position in China, the largest and fastest growing market in the world, among its other international efforts.

W. Randolph Baker, vice president and chief financial officer, highlighted the company’s substantial cash flow. In December, the company announced a more aggressive financial leverage target to more efficiently support existing operations, acquisitions, dividend growth and share repurchasing, while maintaining considerable financial flexibility. Cash returned to shareholders has increased significantly this year. The company announced an 11.9 percent increase in its quarterly dividend in July and continues to expect to spend $2.5 billion for share repurchases in 2007.


07 September, 2007