Beer sales lift Anheuser-Busch profit

ST. LOUIS - Resurgent beer sales helped lift Anheuser-Busch's profit 12 percent in the fourth quarter, but the brewer warned Thursday that rising costs could eat into earnings this year.

The maker of Budweiser and Bud Light said it earned $214 million, or 29 cents per share, in the three months ended Dec. 31, up from $191 million, or 25 cents, in the same period in 2006.

Net sales rose 8 percent to $3.7 billion after excise taxes were deducted.

Analysts polled by Thomson Financial had expected earnings per share of 32 cents.

Shares of Anheuser-Busch, the nation's largest brewer, dropped 76 cents, or 1.6 percent, to $46.50 Thursday.

Revenue at its U.S. beer segment rose 3 percent during the fourth quarter, while international revenue jumped 4.7 percent.

For the full year, Anheuser-Busch reported a profit of $2.12 billion, or $2.79 a share, up from $1.97 billion, or $2.53, in 2006. Net sales for the year rose 6 percent to $16.7 billion.

While the sales climbed overall in 2007, Anheuser-Busch's core brands of Budweiser and Bud Light continue to lag, said Benj Steinman, publisher of Beer Marketer's Insights. Growing overseas sales and revenues from imports that Anheuser-Busch distributes are the only forces driving up sales, he said.

"The consumer preferences are seemingly shifting to craft beers and, to a lesser extent, imports," Steinman said.

Anheuser-Busch plans to boost sales of those brands through a media blitz that will be unveiled in coming weeks, along with a 40 percent increase in the company's sales force, Chief Financial Officer W. Randolph Baker told investors during a conference call.

"For 2008, our clear top priority is to accelerate our core product sales and profitability," Baker said.

The company also will tighten its belt to fight cost increases, Baker said. Rising grain and other commodity expenses are expected to raise the cost of making a barrel of beer by 3 percent to 3.5 percent during 2008. Meanwhile, revenue per barrel is expected to climb between 2.5 percent to 3 percent, he said.

The company is hoping to find savings by improving its supply chain and holding down administrative costs, he said.