AB Reports Expected Earnings Decline

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AB Reports Expected Earnings Decline

NEW YORK--Anheuser-Busch discussed the challenges faced in 2005 and plans for category growth in 2006 to a group of investors and analysts at a presentation in New York on Tuesday.

"Anheuser-Busch's top priority in 2005 has been to restore volume and market share growth momentum," said W. Randoph Baker, Anheuser-Busch's chief fiancial officer, at the presentation. "We implemented a number of domestic beer initiatives to accomplish this objective and we are seeing progress."

The company's market share results in supermarkets improved, gaining six-tenths of a share point in the third quarter and seven-tenths of a share point in the fourth quarter-to-date, according to IRI scanner data. A-B sales-to-retailers rose seven-tenths of one percent in the second half of 2005-to-date (on a selling day adjusted basis).

Financial results were impacted by significant commodity cost pressures, higher investment in marketing, and the company's initiative to reduce promotional price premiums to competition as part of its strategy to restore its volume and market share momentum. The company continues to expect earnings per share for the full year 2005 to be down approximately 10 to 11 percent, excluding one-time items.

"With market share and volume trends now improving, our objectives for 2006 include achieving balanced volume and revenue per barrel growth and stimulating category growth," said Baker. "While cost pressures are expected to continue, we expect to return to earnings per share growth in 2006," Baker continued.

The brewer announced plans to implement price increases and discount reductions on the majority of volume in early 2006 and reported that the domestic beer pricing outlook to be favorable for next year.

"Clearly, Anheuser-Busch has experienced significant challenges in 2005, but the company's substantial competitive advantages in domestic beer provide a strong foundation for long-term success, and the company is well positioned in international beer for long-term growth through our important positions in China and Mexico," Barker said.