E-Malt.com News article: 2570

USA, St. Louis: Anheuser-Busch Cos., Inc. reported on April 28, 2004 record sales and earnings for first quarter 2004 with strong growth from all of its major operating segments. The news was revealed by Patrick Stokes, president and chief executive officer of the company. Stokes made the announcement at the company’s annual meeting of shareholders in Orlando, Fla. Consolidated net sales increased 6.0 % in the first quarter, while earnings per share increased 17.5 %.

First-quarter results benefited from a $19.5 million pretax gain ($.015 per share) from the sale of commodity hedges. This gain is reported in other income/(expense) on the consolidated income statement and as such does not impact gross profit or operating income. Earnings per share excluding this gain increased 14.9 percent vs. first quarter 2003.

“Anheuser-Busch had another excellent quarter and continued its track record of delivering consistent and dependable earnings growth. The company has now achieved 22 consecutive quarters of solid double-digit earnings per share growth. We remain confident in our ability to consistently achieve our double-digit earnings per share growth objective over the long-term and our 12 % earnings per share growth target for 2004, excluding the benefit of the commodity hedge gain,” said Stokes.

Strong growth in domestic revenue per barrel drove a continued enhancement in profit margins in the quarter. Gross profit margin improved 60 basis points to 40.4 % compared to the first quarter 2003, while operating margin increased 30 basis points to 23.6 %. Return on capital employed increased 100 basis points over the past 12 months to 18.8 %.

Domestic revenue per barrel grew 3.1 % in the first quarter 2004 vs. the first quarter 2003. This growth reflects the company’s successful implementation of pricing actions on approximately two-thirds of its domestic volume in two phases – October 2003 and February 2004, and continued consumer trading up to the super premium Michelob family.

Domestic beer sales-to-wholesalers increased 0.8 percent for the first quarter of 2004 vs. the first quarter 2003. Wholesaler sales-to-retailers were up 2.5 percent in the first quarter vs. 2003, including the benefit of leap day, led by the growth of the company’s Michelob ULTRA and Bud Light brands.

The company’s domestic market share (excluding exports) for the first quarter 2004 was 51.7 percent, compared to first quarter 2003 market share of 52.0 percent. The slight decline in market share is due to the timing of 2004 beer shipments. Market share is based on company sales-to-wholesalers. During the quarter, wholesaler sales-to-retailers significantly exceeded the company’s shipments to wholesalers, further reducing wholesaler inventory levels. The company expects full-year market share to increase. 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 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 6.1 percent for the first quarter. Worldwide Anheuser-Busch beer sales volume for the first quarter 2004 rose 1.2 percent, to 27.0 million barrels, vs. first quarter 2003. Worldwide beer 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, increased 1.9 percent for the first quarter of 2004 vs. 2003, contributing to the company’s 1.3 percent increase in total brands volume.

Net sales increased 6.0 percent compared to the first quarter 2003, driven primarily by a 4.4 percent increase in domestic beer segment net sales (due to higher revenue per barrel and higher volume) along with higher sales in all major operating segments.

Income before income taxes increased 12.5 percent vs. the first quarter 2003, reflecting improved results for all of the company’s operating segments.

During the first quarter 2004, the company recognized a $19.5 million pretax gain ($.015 per share) from the sale of commodity hedges in place for future years. These hedges were originally placed using estimates for costs to be contained in the renewal of a supply contract. During the quarter, the company lowered its cost estimates, resulting in significant hedge ineffectiveness in compliance with FAS 133. Due to the hedge ineffectiveness, the company sold the hedges and realized the $19.5 million pretax gain. For business segment reporting purposes, the gain is reported as a corporate item.

Pretax income for the domestic beer segment was up 7.9 percent for the quarter, reflecting higher revenue per barrel and higher beer sales volume. Domestic beer pretax income for the quarter includes a $19.1 million pretax gain ($.014 per share) related to the sale of two beer wholesaler partnerships. For consolidation reporting purposes, the gain is reported in other income/(expense), net.

International beer segment pretax income improved 13 percent in the first quarter vs. 2003 primarily due to volume and profit growth in China and Canada.

Packaging segment pretax profits were up 9 percent in the first quarter 2004. This increase is primarily due to higher soft drink can volume and improved plant operations.

Entertainment segment pretax results improved by $9.5 million, up 46 percent compared to the first quarter 2003, primarily due to increased attendance and pricing.

Equity income increased $15 million in the first quarter 2004 vs. 2003, primarily reflecting the benefit of price increases implemented by Grupo Modelo coupled with volume growth.

Net income increased 13.4 percent over first quarter 2003. Diluted earnings per share were $.67, an increase of 17.5 percent, compared to the first quarter 2003. Earnings per share excluding the gain on commodity hedges increased 14.9 percent 1 /. Earnings per share continue to benefit from the company’s ongoing share repurchase program. The company repurchased nearly 11 million shares in the quarter.



30 April, 2004