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Anheuser-Busch Cos. Reports Improved Sales and Earnings for the First Quarter 2007
ST. LOUIS, April 25 /PRNewswire-FirstCall/ -- Anheuser-Busch Cos., Inc.
(NYSE: BUD) reported improved sales and earnings for the first quarter 2007
today at its annual meeting of shareholders held in Orlando, Fla.
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."
BEER SALES RESULTS
The company's reported beer volume is summarized in the following table:
Beer Volume (millions of barrels)
First Quarter 2007 vs. 2006
2007 2006 Barrels %
U.S. 25.7 25.6 Up 0.1 Up 0.5 %
International 5.2 4.8 Up 0.4 Up 8.7 %
Worldwide A-B Brands 30.9 30.4 Up 0.5 Up 1.8 %
Equity Partner Brands 6.7 6.4 Up 0.3 Up 4.1 %
Total Brands 37.6 36.8 Up 0.8 Up 2.2 %
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.
Total brands volume increased 2.2 percent for the first quarter 2007.
FIRST QUARTER 2007 FINANCIAL RESULTS
Key operating results and a discussion of financial highlights for the
first quarter 2007 compared to the first quarter 2006 follow.
In millions, except per share First Quarter 2007 vs. 2006
2007 2006 $ %
Gross Sales $4,406 $4,296 Up $110 Up 2.5%
Net Sales $3,858 $3,756 Up $102 Up 2.7%
Income Before Income Taxes $ 596 $ 615 Dn $ 19 Dn 3.1%
Equity Income $ 159 $ 122 Up $ 37 Up 30.3%
Net Income $ 518 $ 499 Up $ 19 Up 3.7%
Diluted Earnings per Share $. 67 $. 64 Up $.03 Up 4.7%
-- 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.
Other Matters
Anheuser-Busch will conduct a conference call with investors to discuss
first quarter earnings results at 3 p.m. CDT today. The company will
broadcast the conference call live via the Internet. For details visit the
company's site on the Internet at http://www.anheuser-busch.com .
Note
1. Domestic revenue per barrel is calculated as net sales generated
by the company's U.S. beer operations on barrels of beer sold,
determined on a U.S. GAAP basis, divided by the volume of beer
shipped to U.S. wholesalers.
This release contains forward-looking statements regarding the
company's expectations concerning its future operations, earnings and
prospects. On the date the forward-looking statements are made, the
statements represent the company's expectations, but the company's
expectations concerning its future operations, earnings and prospects may
change. The company's expectations involve risks and uncertainties (both
favorable and unfavorable) and are based on many assumptions that the
company believes to be reasonable, but such assumptions may ultimately
prove to be inaccurate or incomplete, in whole or in part. Accordingly,
there can be no assurances that the company's expectations and the
forward-looking statements will be correct. Important factors that could
cause actual results to differ (favorably or unfavorably) from the
expectations stated in this release include, among others, changes in the
pricing environment for the company's products; changes in U.S. demand for
malt beverage products, including changes in U.S. demand for other alcohol
beverages; changes in consumer preference for the company's malt beverage
products; changes in the distribution for the company's malt beverage
products; changes in the cost of marketing the company's malt beverage
products; regulatory or legislative changes, including changes in beer
excise taxes at either the federal or state level and changes in income
taxes; changes in the litigation to which the company is a party; changes
in raw materials prices; changes in packaging materials costs; changes in
energy costs; changes in the financial condition of the company's
suppliers; changes in interest rates; changes in foreign currency exchange
rates; unusual weather conditions that could impact beer consumption in the
U.S.; changes in attendance and consumer spending patterns for the
company's theme park operations; changes in demand for aluminum beverage
containers; changes in the company's international beer business or in the
beer business of the company's international equity partners; changes in
the economies of the countries in which the company's international beer
business or its international equity partners operate; future acquisitions
or divestitures; and the effect of stock market conditions on the company's
share repurchase program. Anheuser-Busch disclaims any obligation to update
or revise any of these forward-looking statements. Additional risk factors
concerning the company can be found in the company's most recent Form 10-K.
Anheuser-Busch Companies, Inc.
Comparative Consolidated Statement of Earnings (Unaudited)
(In Millions, Except Per Share)
Change 2007
First Quarter vs. 2006
Ended March 31, Fav./(Unfav.)
2007 2006 $ %
Gross sales $4,405.6 $4,296.3 $109.3 2.5
Excise taxes (547.2) (540.7) (6.5) (1.2)
Net Sales 3,858.4 3,755.6 102.8 2.7
Cost of sales (2,474.7) (2,417.7) (57.0) (2.4)
Marketing, distribution and
administrative expenses (665.7) (615.7) (50.0) (8.1)
Operating income 718.0 722.2 (4.2) (0.6)
Interest expense (119.9) (115.1) (4.8) (4.2)
Interest capitalized 3.5 4.0 (0.5) (12.4)
Interest income 0.5 0.6 (0.1) (17.3)
Other income/(expense), net (5.9) 3.7 (9.6) (259.7)
Income before income taxes 596.2 615.4 (19.2) (3.1)
Provision for income taxes (238.1) (238.6) 0.5 0.2
Equity income, net of tax 159.4 122.4 37.0 30.3
Net income $ 517.5 $ 499.2 $ 18.3 3.7
Basic earnings per share $ .68 $ .64 $ .04 6.3
Diluted earnings per share $ .67 $ .64 $ .03 4.7
Decrease
Weighted Average Shares Outstanding Shares %
Basic 763.5 776.1 (12.6) (1.6)
Diluted 773.3 780.2 (6.9) (0.9)
Anheuser-Busch Companies, Inc.
Business Segments (Unaudited)
First Quarter Ended March 31
(In Millions)
Inter- Enter- Corp- Con-
U.S. national Pack- tain- orate soli-
Beer Beer aging ment & Elims dated
2007
Gross Sales $3,463.5 279.5 604.5 185.0 (126.9) $4,405.6
Net Sales:
- Intersegment $ 0.8 0.3 232.0 -- (233.1) --
- External $2,959.4 235.3 372.5 185.0 106.2 $3,858.4
Income Before
Income Taxes $ 762.1 17.6 44.5 (18.5) (209.5) $ 596.2
Equity Income $ 0.1 159.3 -- -- -- $ 159.4
Net Income $ 472.6 170.2 27.6 (11.5) (141.4) $ 517.5
2006
Gross Sales $3,357.7 257.1 629.4 170.7 (118.6) $4,296.3
Net Sales:
- Intersegment $ 0.7 -- 225.9 -- (226.6) --
- External $2,856.5 216.9 403.5 170.7 108.0 $3,755.6
Income Before
Income Taxes $ 774.2 22.1 38.7 (17.6) (202.0) $ 615.4
Equity Income $ 0.6 121.8 -- -- -- $ 122.4
Net Income $ 480.6 135.5 24.0 (10.9) (130.0) $ 499.2
In 2007, the company changed reporting responsibility for certain
administrative and technology support costs from Corporate to the U.S.
beer segment. 2006 segment results have been updated to conform to this
reporting convention.
Anheuser-Busch Companies, Inc.
Consolidated Balance Sheet (Unaudited)
(In Millions)
March 31, December 31,
2007 2006
Assets
Current Assets:
Cash $ 274.1 $ 219.2
Accounts receivable 949.1 720.2
Inventories 802.7 694.9
Other current assets 207.3 195.2
Total current assets 2,233.2 1,829.5
Investments in affiliated companies 3,803.1 3,680.3
Plant and equipment, net 8,872.6 8,916.1
Intangible assets, including goodwill
of $1,085.5 and $1,077.8 1,441.0 1,367.2
Other assets 611.9 584.1
Total Assets $16,961.8 $16,377.2
Liabilities and Shareholders Equity
Current Liabilities:
Accounts payable $ 1,279.6 $ 1,426.3
Accrued salaries, wages and benefits 274.7 342.8
Accrued taxes 362.2 133.9
Accrued interest 122.5 124.2
Other current liabilities 243.2 218.9
Total current liabilities 2,282.2 2,246.1
Retirement benefits 1,166.6 1,191.5
Debt 8,276.2 7,653.5
Deferred income taxes 1,181.1 1,194.5
Other long-term liabilities 237.7 152.9
Shareholders Equity:
Common stock 1,476.9 1,473.7
Capital in excess of par value 3,057.1 2,962.5
Retained earnings 17,033.0 16,741.0
Treasury stock, at cost (16,479.8) (16,007.7)
Accumulated non-owner changes in equity (1,269.2) (1,230.8)
Total Shareholders Equity 3,818.0 3,938.7
Commitments and contingencies -- --
Total Liabilities and
Shareholders Equity $16,961.8 $16,377.2
Anheuser-Busch Companies, Inc.
Consolidated Statement of Cash Flows (Unaudited)
(In Millions)
Three Months
Ended March 31,
2007 2006
Cash flow from operating activities:
Net income $517.5 $499.2
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 246.0 245.5
Decrease in deferred income taxes (21.9) (17.3)
Stock-based compensation expense 15.1 17.1
Undistributed earnings of affiliated companies (159.4) (122.4)
Other, net (40.9) (180.9)
Operating cash flow before the change
in working capital 556.4 441.2
(Increase) / Decrease in working capital (240.4) 5.8
Cash provided by operating activities 316.0 447.0
Cash flow from investing activities:
Capital expenditures (154.4) (159.1)
Acquisitions (83.5) --
Cash used for investing activities (237.9) (159.1)
Cash flow from financing activities:
Increase in debt 585.1 299.3
Decrease in debt (0.7) (143.2)
Dividends paid to shareholders (225.5) (209.8)
Acquisition of treasury stock (477.4) (259.7)
Shares issued under stock plans 95.3 12.2
Cash used for financing activities (23.2) (301.2)
Net increase / (decrease) in cash during the period 54.9 (13.3)
Cash, beginning of period 219.2 225.8
Cash, end of period $274.1 $212.5
SOURCE Anheuser-Busch Cos., Inc.
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