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US beer boost for Bud maker

By Neil Merrett , 26-Jul-2007

Anheuser-Busch lifted net sales by 6.1 per cent to $4.5bn (€3.2bn) during the second fiscal quarter, led by strong growth particularly in its US beer operations.

The company said yesterday that improving sales volumes throughout its brands had resulted in a 4.3 per cent rise in pre-tax profit for the period ending 30 June.

 

 

 

With increasing commodity prices and production, brewers are looking to expand their product portfolios to include more imported brands as well as targeting opportunities in emerging markets to better push their products.

 

 

 

With this focus in mind, company president August Busch IV, said the health of its beer brands in the US generally reflected growing profitability for its products throughout all its international markets.

 

 

 

"The positive outlook is based on the favourable pricing environment, our broadened US beer portfolio to access high-margin growth opportunities, successful productivity improvement initiatives that are mitigating cost pressures and enhanced earnings contributions from our international beer segment," he stated.

 

 

 

Margins for the period were up slightly by 0.1 of a percentage point to 6.4 per cent for the period over last year, attributed by Anheuser-Busch to increased barrel revenue and sales volumes especially within the US. However, these increased revenues were offset slightly by higher production and marketing costs.

 

 

 

Net sales within the US were up 7 per cent to $3.2bn (€2.3bn) over the same period last year, with profit increasing 1.5 per cent to $795m (€580m).

 

 

 

The brewer said that its profit was also up throughout the majority of its international markets like China and Canada, though declines within its UK operations proved to be a notable exception.

 

 

 

Despite the setback in the UK, Anheuser-Busch's international division posted a 4 per cent net sales increase to $278m (€202m). Profitability was increased by 10 per cent to $28.6m (€20.8m).

 

 

 

The company's packaging arm also underwent a significant rise in revenue, which was up 5.1 per cent to $495m (€361m). Improved profitability within its aluminum recycling operations was attributed to the increase according to Anheuser Busch. Pre-tax earnings for the segment were up 21 per cent to $55m (€40m) as a result.

 

 

 

Outside of brewing, the company made a further $16m (€11.6m) in revenue through the sale of a Spanish theme park that had formed part of its entertainment portfolio.

 

 

 

Anheuser-Busch added that it expected beer production to continue to drive profitability in its operations through the remainder of 2007 and into 2008 though.

 

 

 

The brewer said that it would enact new pricing strategies for some of its brands and markets to ensure it met its expectations for the year ahead.

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