USA: Anheuser-Busch expects improvement in sales, profit

Anheuser-Busch Cos. Inc. on reiterated on May 25 earnings-per-share growth in the low single digits for 2005, with officials expecting stronger domestic beer sales over the second half of the year, despite challenges like stronger competition, according to Associated Press.

Officials with the St. Louis-based brewer of Budweiser also said during a conference with analysts and investors that the company plans to increase prices at or slightly below the consumer price index over the long term, though they did not address short-term pricing.

The consumer price index rose 0.5 per cent in April, down slightly from a 0.6 per cent rise in March.

The company is projecting earnings per share of $2.76 US to $2.84 for 2005, up one per cent to four per cent from earnings of $2.73 per share in 2004.

Chief financial officer Randolf Baker said domestic beer sales to wholesalers and earnings per share are expected to decline in the second quarter, but pick up over the final six months "as our marketing initiatives gain traction with consumers and year over year comparisons ease."

Anheuser-Busch has nearly half of the domestic beer market, and makes the No. 1 full-calorie beer, Budweiser, and the No. 1 light beer, Bud Light. But the company is facing increasing competition from No. 2 Miller Brewing Co. and increasing consumer thirst for wines and distilled spirits.

"That market share has become their overwhelming guiding light," said Juli Niemann, an analyst for RT Jones in St. Louis. "They want to make sure they maintain domestic position." She called the 2005 earnings projection "optimistic."

Anheuser-Busch Cos. Inc. president and chief executive officer Patrick Stokes said the company continues to target double-digit earnings per share growth long-term.

"Facing challenges is nothing new to Anheuser-Busch and, time after time, we have emerged more profitable with a stronger foundation for future growth," Stokes said.

Last week, Miller president and chief executive Norman Adami said Anheuser-Busch "started a price war that will have no winners, even over the long term." Yet he said Miller planned to match Anheuser-Busch's pricing moves.

Niemann said that while Anheuser-Busch may plan to raise prices over the long term, "long term does not include this summer. "I don't see any price increase in beer," Niemann said. "I see prices coming down as competition goes up."

Anheuser-Busch shares rose 22 cents to close at $47.40 Wednesday on the New York Stock Exchange, near the low end of the 52-week range of $44.85 to $54.74.

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