USA: Anheuser-Busch Cos. reports improved sales and earnings for the first Quarter 2007

Anheuser-Busch Cos., Inc. reported improved sales and earnings for the first quarter 2007 at its annual meeting of shareholders held in Orlando, Fla, PRNewswire reported April 25. Consolidated net sales increased 2.7 percent in the first quarter 2007 and earnings per share increased 4.7 percent.

"We are encouraged by our progress on key initiatives during the first quarter," said August A. Busch IV, president and chief executive officer of the company. "We successfully implemented domestic beer price increases and discount reductions earlier this year and the pricing environment continues to be favorable. Our cost reduction efforts have lessened the impact of ongoing cost pressures and the gross profit margin for our company improved during the quarter. We are making good progress in transitioning the InBev European brands into our wholesaler system and in implementing our import and energy drink alliances. And our international segment, led by Grupo Modelo, continues to make a significant contribution to earnings growth. These factors, combined with our marketing and selling initiatives, provide a good foundation for accelerated earnings growth in 2007."

U.S. beer shipments-to-wholesalers increased 0.5 percent for the first quarter 2007, with acquired and import brands contributing 1.2 points to overall growth. Wholesaler inventories at the end of the quarter were about one-half of a day lower than the first quarter 2006.

First quarter 2007 sales-to-retailers were up 0.1 percent, including a contribution of 1.7 points of growth from acquired and import brands.

In February the company became the exclusive importer of select InBev European brands. To date the transition of these brands into the Anheuser- Busch wholesaler network is ahead of schedule.

The company's estimated U.S. market share for the first quarter 2007 was 50.2 percent, compared to first quarter 2006 market share of 50.9 percent. 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, increased 8.7 percent for the first quarter 2007, driven primarily by sales in China and Canada.

Worldwide Anheuser-Busch beer sales volume for the first quarter 2007 rose 1.8 percent, to 30.9 million barrels. Worldwide beer volume is comprised of domestic volume plus international volume.

Equity partner brands volume, representing the company's share of its equity partners' volume reported on a one-month lag, increased 4.1 percent for the first quarter of 2007 due to increased volume for Grupo Modelo and Tsingtao.

- Net sales increased 2.7 percent, driven primarily by increased U.S. beer sales and an 8.5 percent increase in international beer segment net sales from higher volume. U.S. beer segment sales increased 3.6 percent on improved revenue per barrel (1) and increased sales volume. Revenue per barrel was up 2.3 percent on the implementation of price increases and discount reductions on a majority of the company's U.S. volume in the first quarter and favorable mix from import sales.

- Income before income taxes decreased 3.1 percent due primarily to lower profits in U.S. and international beer operations and increased interest expense. Income before income taxes for U.S. beer was down $12 million, reflecting higher marketing expense for trademark brands, as well as incremental marketing for the new import portfolio. International beer pretax income was down $5 million, primarily due to lower results in the United Kingdom, partially offset by increased profits in China and Canada. Packaging segment pretax income increased $6 million primarily due to improved performance for all of its businesses, led by higher profits from aluminum recycling operations. Entertainment segment pretax results were down slightly versus the prior year.

- Equity income increased $37 million in the first quarter 2007, primarily due to improved Grupo Modelo earnings resulting from higher volume and benefits associated with the new Crown import and distribution joint venture. Equity income includes a $17 million benefit from the return of an advertising fund that was part of the prior import contract, partially offset by a timing change in the recognition of Modelo's export sales to the U.S.

- Net income in the first quarter 2007 increased 3.7 percent and diluted earnings per share were up 4.7 percent versus prior year. Earnings per share continue to benefit from the company's ongoing share repurchase program. The company repurchased over 9 million shares in the first quarter.

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