Stale Results for Anheuser-Busch

The brewer's profit drops 40% amid lower U.S. demand and rising costs.
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Anheuser-Busch

(BUD) - Get Report

reported Wednesday that its fourth-quarter earnings declined nearly 40% as costs rose and domestic beer sales fell.

The St. Louis brewing giant posted fourth-quarter earnings of $201 million, or 26 cents a share, down from $332 million, or 42 cents a share, recorded in the year-ago period. Analysts polled by Thomson First Call had an average forecast for earnings of 27 cents a share.

"We've had a challenging year in the domestic beer business and our 2005 sales and earnings per share were disappointing," the company said.

Anheuser-Busch, whose brands includes Budweiser and Michelob, said net sales for the quarter totaled $3.37 billion, roughly even with a year earlier. Overall, U.S. beer sales lagged in 2005 as consumer tastes continued to shift toward wine and spirits.

The company's domestic revenue per barrel decreased 2.7% for the quarter due to promotional activity. The decline was partly offset by a 13.3% increase in beer volumes in international markets.

The company also was plagued by higher costs for aluminum, glass and energy, plus expenses for packaging changes such as applied plastic labels and aluminum bottles.

Anheuser-Busch plans to raise prices to help remedy its revenue and margin problems.

"Moderate price increases and discount reductions will cover the majority of the company's domestic volume," the company said.

Bud shares recently were down 14 cents to $41.30.