CHICAGO (AFX) -- While its profit was flat, Anheuser-Busch began to move the needle again in the first quarter as the world's No. 2 brewer posted increases in both sales and volume in a report that sent shares of the battered stock up more than 5% on Wednesday.
Earlier in the session, Anheuser-Busch said that it earned $499 million, or 64 cents a share, on the period -- down slightly from the $500 million, or 64 cents of the year-ago period. Sales net of excise tax came in at $3.76 billion, a gain of 5.4% on the back of higher domestic and international beer sales, along with a 13% bump in sales from packaging operations sales.
The average estimate of analysts polled by Thomson First Call had been for the company to earn 56 cents a share on revenue of $3.65 billion.
The company's domestic beer shipments-to-wholesalers were up 4.6%, while wholesaler sales-to-retailers were up 3.3%, or 1.7% when adjusted for selling days. Bud Light was the standout performer, with mid-single digit sales growth. Anheuser Busch's estimated domestic market share crept up to 51.2% from 51.1%.
International volume was up 9.4%, primarily due to higher sales in China, while total worldwide volume rose 5.4% to 30.4 million barrels.
'We have restored our domestic volume growth momentum,' said CFO Randy Baker in a conference call. 'And we have price increases or discount reductions basically across the board.'
He added that the company still expects sales and earnings growth in 2006, but didn't offer any specific profit targets. He does expect revenue-per-barrel to be up 1% to 2%, with 'year-over comparisons becoming sequentially easier.'
Overall, he said the pricing environment is 'favorable to last year,' noting that international sales continue to make 'significant contributions' to earnings growth.
He also said that 'on-premise' sales -- those in bars and restaurants -- have been showing signs of a rebound, albeit more in the latter than the former. Aggressive on-premise marketing by competing forms of alcohol, particularly distilled spirits, have cut deeply into beer's share of the crucial segment.
But Anheuser-Busch is now getting 'better performance than we have seen on-premise for some time,' Baker said.
Shares of Anheuser-Busch popped as high as $44.95 and ended at $44.90, a gain of 5.3% on the session.
In a note to investors, Caroline Levy of UBS wrote that the results 'also bode well' for Molson Coors .
'One primary concern has been pricing heading into the key summer selling season,' she said. 'Given [A-B's] strong volume growth, we see a lower risk of aggressive discounting by [the company] this summer.'
However, she concluded Miller 'could still lead pricing down, given recent weakness in its US trends.'
Said Marc Greenberg at Deutsche Bank: 'Hey, this is not a difficult story to grasp: Sell a little more, charge a little more, make a lot more.'
At this point, he said, what lacks is 'better pricing,' but added that 'leverage from volumes is clearly impressive.' This story was supplied by MarketWatch. For further information see www.marketwatch.com.