USA: Anheuser-Busch Cos., Inc. announced on October 27, 2004 it achieved improved sales and earnings for the third quarter and nine months of 2004. The announcement was made by Patrick Stokes, president and chief executive officer of the company. Consolidated net sales increased 5.1 % in the third quarter, while earnings per share increased 6.3 %. Net sales and earnings per share increased 5.8 percent and 10.8 percent, respectively, for the nine months.

Results for the nine months of 2004 benefited from a $19.5 million pretax gain ($.015 per share) in the first quarter 2004 from the sale of commodity hedges. This gain is reported in other income/(expense) on the consolidated income statement and does not impact gross profit or operating income. Excluding this gain, earnings per share for the nine months increased 10.1 percent 1/ vs. 2003.

“Anheuser-Busch is achieving another year of solid growth in earnings per share, despite the general slowdown in spending for consumer products this summer. We anticipate earnings per share growth of 10 percent to 11 percent 2/ for 2004, excluding the benefit of the commodity hedge gain and including the dilution related to the Harbin acquisition,” said Stokes. “Additionally, we currently expect earnings per share growth in the 7 percent to 10 percent range for 2005 compared with 2004 (on a reported basis, including the commodity hedge gain). We remain confident in our ability to achieve our double-digit earnings per share growth objective over the longer-term.”

During the third quarter Anheuser-Busch completed its acquisition of the Harbin Brewery Group. The Harbin investment is consolidated within the company's financial statements. The company reports Harbin's results on a one-month lag basis.

Domestic revenue per barrel 3/ increased 2.1 percent in the third quarter. Domestic revenue per barrel for the nine months of 2004 grew 2.5 percent vs. the same periods in 2003, reflecting the continuing favorable pricing environment.

Gross profit margin declined 110 basis points in the third quarter, to 42.1 percent and operating margin declined 90 basis points to 25.6 percent. The decrease in third quarter margins is primarily due to higher sales from the company's commodity-based aluminum recycling operations and the impact of Florida hurricanes on the entertainment business segment. For the nine months of 2004, gross and operating margins were both down 20 basis points, to 41.5 percent and 25.0 percent, respectively. These declines are also primarily due to the impact of higher sales from the company's commodity-based aluminum recycling operation, which offset a 30 basis point increase in domestic beer gross margin.

Consistent with the company's practice of implementing moderate annual price increases in two phases, Anheuser-Busch initiated selected pricing actions beginning in early October 2004. As in the past, the revenue enhancement initiatives have been tailored to specific markets, brands and packages and preliminary results are encouraging. The second phase of the pricing initiatives is planned for the first quarter of 2005.

Domestic beer sales-to-wholesalers were up 0.1 percent for the third quarter of 2004 vs. the third quarter 2003, and were up 0.9 percent for the nine months of 2004. The company now expects full year sales-to-wholesalers to be up about 0.5 percent.

Wholesaler sales-to-retailers were down 1.3 percent in the third quarter and up 0.7 percent for the nine months, vs. 2003 levels. Both sales-to-wholesalers and sales-to-retailers have been adversely impacted by the abnormally cool and wet weather in many key markets, especially in the Southeastern United States, and the general slowdown in consumer spending during the third quarter.

The company's domestic market share (excluding exports) for the nine months of 2004 and 2003 was 50 percent. 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 112.1 percent for the third quarter and 45.7 percent for the nine months of 2004. International beer volume for the third quarter 2004 includes 2.6 million barrels for Harbin. Excluding Harbin, international volume decreased 1.8 percent in the third quarter. The decrease is due to lower volume in Europe, reflecting a difficult comparison with volume in 2003 that benefited from unusually hot summer weather. For the nine months of 2004, international volume excluding Harbin increased 3.3 percent, due primarily to higher sales volume in China. Worldwide Anheuser-Busch beer sales volume for the third quarter and nine months of 2004 rose 8.8 percent and 4.2 percent, to 32.5 million and 89.1 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, increased 6.5 percent for the third quarter and 3.6 percent for the nine months of 2004 vs. 2003, contributing to the company's 8.5 percent and 4.1 percent increase in total brands volume for the same periods.

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