US: A-B upbeat for 2006 despite volumes pressure
Anheuser-Busch has seen its sales and earnings rebound during the first nine months of the year compared to 2005, despite slow volume growth across the industry.
The US brewing giant also said today (28 November) that its earnings outlook remains positive.
Speaking at a presentation to investors and analysts in New York, W. Randolph Baker, vice president and CFO of Anheuser-Busch Companies said: "While volume growth for Anheuser-Busch and the industry has slowed in the second half of this year, improving revenue per barrel and cost of goods sold results have contributed to an acceleration in domestic beer profit growth."
Baker said that the implementation of the company's 2007 pricing plan is underway, with the majority of price increases scheduled to take place early next year. The company expects revenue per barrel growth to be next year against 2006, while cost of goods sold per barrel is expected to be up less than in 2006, due in part to lower energy costs.
"Enhancing volume growth will continue to be a major focus next year and we have a number of marketing initiatives, supported by increased marketing spending, to grow our trademark brands and increase our participation in the high-end segment," Baker continued.
Turning to A-B's international beer segment, an increasingly important contributor to the company's earnings growth, Baker said the group's 50% ownership of Grupo Modelo would give a boost to earnings next year. He said the profitability of Modelo's export business to the US will be significantly enhanced by Modelo's new ten-year distribution joint venture with Constellation.
Furthermore, Baker added that, through its wholly-owned Budweiser and Harbin operations, plus the strategic partnership with Tsingtao, A-B is well positioned to capitalise on the substantial long-term growth opportunities in the Chinese beer market.
However, Baker warned that the guidance for international beer operations profits were now down for the year due to unfavourable revenue mix in the UK.
Otherwise Baker reaffirmed all of the guidance for key performance drivers for the full year 2006 that were given when the company unveiled its third quarter earnings last month.
He also reiterated the company's long-term earnings per share growth target in the 7% to 10% range.
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