E-Malt.com News article: USA: Anheuser-Busch Cos. reported First Quarter 2005 Financial Results

Anheuser-Busch Cos., Inc. reported first quarter sales and earnings results on April 27 at its annual meeting of shareholders held in Williamsburg, Va. Consolidated net sales increased 2.5 percent in the first quarter and reported earnings per share decreased 3.0 percent. Excluding one-time gains in both 2005 and 2004, first quarter earnings per share decreased 4.5 %.

"Anheuser-Busch had a challenging first quarter in its domestic beer business," said Patrick Stokes, president and chief executive officer of the company. "The domestic beer industry and Anheuser-Busch experienced volume declines and higher commodity cost pressures. The company has a number of initiatives in place to enhance beer volume growth, including introduction of new products, led by Budweiser Select, increased investments in domestic marketing, stepped up on premise sales initiatives, new packaging and tactical price promotions. We are confident the company will successfully restore its volume and market share growth momentum, and we are forecasting earnings per share growth in the low single digit percent range for 2005, excluding the one-time gains."

Domestic beer sales-to-wholesalers decreased 2.7 % for the first quarter 2005 vs. the first quarter 2004, to 24.4 million barrels. Wholesaler inventories at the end of the first quarter were about one-and-one-half days higher than at the end of the first quarter last year, representing a reduction of approximately one day versus the two-and-one-half day differential at the end of 2004. Wholesaler sales-to-retailers were down 1.0 percent in the first quarter vs. 2004 on a comparable selling day basis due to generally weak industry volume conditions and the comparison with the strong performance of Michelob ULTRA last year. Bud family sales-to-retailers increased in the first quarter 2005, driven by solid Bud Light growth and the national introduction in late February of Budweiser Select.

The company's estimated domestic market share (excluding exports) for the first quarter 2005 was 51.2 %, compared to first quarter 2004 market share of 51.7 %. Domestic market share is based on estimated U.S. beer industry shipment volume 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 131 % for the first quarter.

International beer volume in the first quarter 2005 includes 2.5 million barrels related to Harbin Brewery Group (acquired in the third quarter 2004). Excluding Harbin, international beer volume decreased 1.6 percent.

Worldwide Anheuser-Busch beer sales volume for the first quarter 2005 rose 6.6 percent, to 28.8 million barrels, vs. first quarter 2004. Worldwide beer volume is comprised of domestic volume plus 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 1.6 percent for the first quarter of 2005 vs. 2004, due to the sale by the company of its ownership stake in Compania Cervecerias Unidas S.A. (CCU) in late 2004. Excluding CCU volume, equity partners' volume increased 6.8 percent. Total brands volume increased 5.5 percent for the first quarter 2005.

Net sales increased 2.5 percent vs. the first quarter 2004, driven primarily by a 29 percent increase in international beer segment net sales due to the Harbin acquisition, higher entertainment segment sales and increased commodity-based sales from packaging operations.

Domestic beer segment sales decreased 1.3 % primarily due to lower beer sales volume partially offset by higher revenue per barrel. Domestic revenue per barrel 3/ grew 1.6 percent in the first quarter 2005 vs. the first quarter 2004. This growth reflects the company's implementation of price increases on over two-thirds of its domestic volume in two phases in October 2004 and February 2005, partially offset by tactical pricing actions and unfavorable product mix from lower Bacardi Silver and Michelob ULTRA sales volumes.

Income before income taxes decreased 14.5 percent vs. the first quarter 2004, primarily reflecting lower profits in domestic beer, higher interest expense and lower one-time gains, partially offset by improved entertainment segment results due primarily to the Easter holiday in the first quarter 2005.

During the first quarter 2005, the company recognized a $15.4 million pretax gain ($.024 per share) from the sale of its 13 percent equity interest in Port Aventura, a theme park near Barcelona, Spain. This pretax gain is included in other income for consolidated reporting, and classified as a corporate item for business segment reporting purposes. In the first quarter 2004, the company recognized in other income a $19.5 million pretax gain ($.015 per share) from the sale of commodity hedges. For business segment reporting purposes, the commodity hedge gain is reported as a corporate item.

International beer pretax income was down 5 percent primarily due to lower volume in China, partially offset by the inclusion of Harbin results. The company completed its acquisition of Harbin and began consolidating Harbin results in the third quarter 2004.

Packaging segment pretax profits were down 3 percent primarily due to higher materials cost for glass manufacturing operations.

Entertainment segment pretax results improved 42 percent due to increased attendance, admissions pricing and in-park spending, partially offset by higher park operating expenses.

Equity income increased $17 million in the first quarter 2005 vs. 2004, primarily reflecting the benefit of Grupo Modelo volume growth and a lower Mexican income tax rate.

Net income decreased 6.7 % compared to first quarter 2004. Diluted earnings per share were $.65, a decrease of 3 percent, compared to the first quarter 2004. Earnings per share excluding the 2005 gain on the sale of the Spanish theme park and the 2004 gain on commodity hedges decreased 4.5 %. Earnings per share continue to benefit from the company's ongoing share repurchase program. The company repurchased nearly 10 million shares in the quarter.


30 April, 2005