Anheuser-Busch Cos. (NYSE:BUD) reported a first quarter EPS of $.67, short of the $.69 analysts had expected, and the market reacted with a share price drop of $1.45 to close at $50.90. The company reported sales of 37.6 million barrels of suds for the quarter, up 2.2% over 2006, but only 0.5% of that growth was in the U.S. International sales were up 8.7%, accounting for the lion's share of growth. The company credits this to strong sales in Canada and China. Also, equity partners Grupo Modelo and Tsingtao did well for the quarter, boosting this class by 4.1% on modest volumes.
More troubling was the report that the company's market share dropped from 50.9% in 2006 to 50.2%. A price increase imposed in this quarter helped the company reach a consolidated net sales increase of 2.7%. For the quarter, the company reported net income of $518 million, up from $499 million a year ago.
These results show clearly how important the international market is to the future of the company. It has made major investments recently in China and India. It also is introducing new drinks designed to appeal beyond its traditional customer base, such as the Budweiser/Clamato mix Cheleda and the Korean spirit Ku Soju.
The question is, can A-B transition to the international market quickly enough to offset its gridlock in the American market? Comparing its 19% growth in the last year to InBev NV's 41%, it's obvious the company has a lot of work (and investment) to do. If A-B's struggles continue, expect to hear more rumors of takeover interest by industry giants such as SABMiller.
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Reader Comments (Page 1 of 1)
4-29-2007 @ 2:43PM
SHANNON said...
I guess its (BUDS) new formula to use hip hop to promote the their brands(circa JAY-Z).I got the Deziak-KU SOJU mixtape II from a goody bag at the Amoaba record store in hollywood. Being a stockholder in Anheuser Busch I think this is a smart move.The music is edgy but sounds good.I have not tried the KU SOJU brand but i plan on searching it out for a taste test.