E-Malt.com News article: 4149

USA, St. Louis: Anheuser-Busch Cos. Inc., the largest U.S. brewer, announced on February 2, 2005, it has achieved increased sales and earnings for the fourth quarter and full year 2004. The announcement was made by Patrick Stokes, president and chief executive officer of the company. Consolidated net sales increased 4.7 % in the fourth quarter, while reported earnings per share increased 16.7 %. Net sales and reported earnings per share increased 5.6 % and 11.7 %, respectively, for the full year. All major business segments contributed to the sales and profit growth for the year.

Earnings per share for 2004 benefited from certain one-time items --- a $.015 per share gain in the first quarter from the sale of commodity hedges; a $.018 per share gain in the fourth-quarter on sale of the company’s equity investment in Compañía Cervecerías Unidas S.A. (CCU); and a fourth-quarter deferred income tax benefit of $.012 per share related to the company’s Modelo investment due to a reduction in Mexican corporate income tax rates. None of these one-time items impacts sales, gross profit or operating income. Excluding these items, earnings per share for the full year and fourth quarter increased 10.1 percent and 8.3 percent vs. 2003, respectively.

As a result of the continuing favorable pricing environment, domestic beer revenue per barrel increased 2.3 % in the fourth quarter and grew 2.5 percent for the full year 2004 vs. the same periods in 2003.

Consistent with the company’s practice of implementing moderate annual price increases in two phases, Anheuser-Busch completed the first stage of its pricing plan for 2005 in October 2004. The success of these pricing actions is reflected in the company’s fourth quarter revenue per barrel results. As planned, the second phase of the 2005 pricing initiatives is being implemented this week. As in the past, the revenue enhancement initiatives have been tailored to specific markets, brands and packages.

Gross profit margin declined 110 basis points in the fourth quarter 2004, to 34.2 percent, while operating margin decreased 10 basis points to 13.9 percent. For the full year 2004, gross margin was down 40 basis points, to 39.9 percent and operating margin was down 10 basis points vs. 2003, to 22.5 percent. The declines in margins are primarily due to the impact of higher sales and higher costs from the company’s commodity-based can manufacturing and aluminum recycling operations. Domestic beer gross profit margin decreased 30 basis points for the fourth quarter and increased 20 basis points in the full year.

The increase in domestic beer sales-to-wholesalers for the year is due primarily to continued growth of the Michelob ULTRA and Bud Light brands.

Wholesaler sales-to-retailers were down 3.2 percent in the fourth quarter and declined 0.3 percent for the full year vs. 2003 levels. Both sales-to-retailers and sales-to-wholesalers were adversely impacted during the year by abnormally wet weather in many key markets, especially during the key summer selling season. This was coupled with the general slowdown in consumer spending during the year, particularly among lower income consumers.

The company’s domestic market share (excluding exports) for the full year 2004 was 49.6 percent, compared to 2003 market share of 49.7 %. Domestic market share is based on estimated U.S. beer industry sales using information provided by the Beer Institute and the U.S. Department of Commerce.

International beer volume, consisting of Anheuser-Busch brands produced overseas by company-owned breweries and under license and contract-brewing agreements, plus exports from the company’s U.S. breweries to markets around the world, increased 120.5 percent for the fourth quarter and 64.8 percent for full year 2004. International beer volume includes 2.5 million barrels in the fourth quarter and 5.2 million barrels for the full year related to Harbin, which the company acquired in the third quarter. Excluding Harbin, international beer volume grew 2.7 percent in the fourth quarter and 3.2 percent for the full year. These increases are primarily due to higher sales volume in China, Canada and the United Kingdom.

Worldwide Anheuser-Busch beer sales volume for the fourth quarter and full year 2004 rose 8.8 percent and 5.3 percent, to 27.6 million and 116.8 million barrels, respectively, vs. 2003. Worldwide Anheuser-Busch beer brand volume is comprised of domestic volume and international volume.

International equity partner brands volume, representing the company’s share of its foreign equity partners’ volume reported on a one-month lag, decreased 0.2 percent for the fourth quarter due to the sale of CCU and increased 2.7 percent for the full year 2004 vs. 2003. Total brands volume increased 7.4 percent and 4.9 percent for the fourth quarter and full year, respectively, vs. comparable 2003 periods.

“Anheuser-Busch has achieved another year of solid growth in earnings per share and we expect earnings per share growth in the 6 percent to 9 percent 3/ range for 2005 compared with 2004, excluding the one-time items in 2004 and including the impact of expensing stock options in 2005 and 2004,” said Stokes. Anheuser-Busch will begin expensing stock options when it adopts FAS 123R, “Share-Based Payment,” expected in the first quarter 2005, and will retrospectively apply the standard to all prior periods. “We continue to target double-digit earnings per share growth over the longer-term,” said Stokes.


05 February, 2005