Anheuser-Busch Profit Up on Price Rises

By Mark Weinraub

The company reported fourth-quarter profit of $294 million, or 36 cents a share. This compared with earnings of $269.2 million, or 32 cents a share, last year.

Analysts expected the company to earn between 35 cents and 37 cents a share, with a mean estimate of 36 cents, according to Reuters Research, a unit of Reuters Group Plc.

The company said gross sales rose to $3.72 billion from $3.59 billion. Net sales, including the effect of excise taxes, rose to $3.22 billion from $3.10 billion.

The total volume of Anheuser-Busch products sold rose by 2 percent in the fourth quarter. Domestically, volume rose only 0.5 percent, helped by health conscious consumers who snapped up Michelob Ultra and Bud Light.

Although Michelob Ultra has performed strongly since its introduction about one year ago, it is still too early to predict if it has staying power, said Mark Swartzberg, analyst with Legg Mason.

But its introduction shows that beer drinkers are still looking for new products.

"I do think you can infer that consumers are going to trade up," said Swartzberg, who has a rating of "hold" on Anheuser-Busch shares. "They are going to look for premium products. This is a trend that directionally is a good thing for the beer industry."

Anheuser-Busch said it raised prices in markets that contributed 40 percent of the company's U.S. volume in the fourth quarter. Domestic revenue per barrel rose 2.7 percent in the quarter.

The company said it began to implement price hikes in regions that make up 25 percent of its U.S. volume this week.

"The company's proven ability to leverage its substantial competitive strengths has led to these consistently strong results," Chief Executive Patrick Stokes said in a news release. "The beer pricing environment remains favorable."

Stokes said he was confident in the company's ability to maintain double-digit percentage growth in earnings per share over the long term. He reiterated the company's forecast of 12 percent earnings growth in 2004.

Anheuser-Busch, which said the lawsuit has no merit, defended its advertising practices.

Shares of Anheuser-Busch rose 23 cents to $51.88 in afternoon trading on the New York Stock Exchange. The stock, which had hovered around that level for much of the trading day, rose as high as $52.43 shortly after the earnings were released.