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NEW YORK -- The outlook for big U.S. beer companies is as flat as the third-quarter earnings reported in late October by Anheuser-Busch and Adolph Coors, reported Business Week Online.
A-B reported a 3 percent third-quarter gain, and Coors' earnings per share stayed the same as a year ago's $1.68. While several Wall Street analysts downgraded A-B, the majority of Coors analysts kept their "hold" ratings following a round of downgrades in 2003.
The analysts' moves appear to be for good reason. These days, just about every market force -- from demographics to carb-restricting dietary trends -- is working against drinking a cold brew.
Baby boomers typically cut back on beer-drinking as they age, and young consumers are increasingly finding more beverage satisfaction in spirits. "Wine and spirits could continue to take share from beer, as these categories can better capitalize on shifting consumer trends," said Credit Suisse First Boston beverage analyst Andrew Conway. "Spirits offer greater variety, a more premium image and are benefiting from increasing brand investment." Conway downgraded A-B from "outperform" to "neutral."
Coors, the third-largest U.S. brewer, on Oct. 28 reported that third-quarter sales volume slipped but that earnings rose 4.4 percent on a net-dollar basis on higher prices. Earnings per share stayed the same as a year ago. Income in the quarter rose to $64.1 million from $61.4 million last year. Sales increased 5 percent, to $1.1 billion, from $1.05 billion last year, as U.S. volume fell 2 percent, to 8.6 million barrels. Analysts were looking for Coors to report earnings of $1.75 a share on sales of $1.08 billion. The company is in the midst of trying to complete a merger with Canadian brewer Molson.
On Oct. 27, A-B reported earnings of $684 million during the three-month period ending Sept. 30, vs. $664 million a year ago. That performance met expectations of analysts surveyed by Thomson First Call. A-B CEO Patrick Stokes said during the announcement that earnings should rise 7 percent to 10 percent next year, including a gain from hedges of commodity prices. "We remain confident in our ability to achieve our double-digit earnings per share growth objective over the longer term," he said.