updated 10/25/2006 5:24:41 PM ET 2006-10-25T21:24:41

Anheuser-Busch Cos., one of the world's largest brewers, said Wednesday its profit rose 26 percent in the third quarter, driven by strong domestic beer revenue and productivity improvements, which helped offset energy cost pressures.

The maker of Budweiser and Michelob beers said net income grew to $638 million, or 82 cents per share, for the three months ended Sept. 30 from $505 million, or 65 cents per share, a year ago. Excluding one-time items, the company earned 76 cents per share in the year-ago period.

Gross sales before excise taxes rose nearly 5 percent to $4.88 billion from $4.69 billion last year.

The profit results beat Wall Street expectations with analysts surveyed by Thomson Financial predicting a profit of 81 cents per share.

Net sales of $4.28 billion were just above Wall Street estimates, with analysts predicting $4.24  for the quarter, according to Thomson Financial.

"Earnings growth for the company's domestic beer business accelerated in the quarter, with pretax income up 7 percent. Beer shipments to wholesalers increased 1.1 percent in the third quarter while revenue per barrel was up 2.8 percent versus last year," said Patrick Stokes, president and chief executive officer. "Productivity improvement initiatives, along with somewhat lesser energy cost increases, have helped mitigate continuing cost pressures. In addition, our international beer segment, led by Grupo Modelo, and our entertainment segment are having outstanding years."

Domestic beer shipments to wholesalers increased 1.1 percent, while sales to retailers decreased 0.4 percent, with Rolling Rock, Grolsch and Tiger contributing 0.8 points of growth to both shipments and sales-to-retailers.

The company said it expects earnings to continue to improve in 2007.

Its shares rose 97 cents, or 2.07 percent, to $47.86 on the New York Stock Exchange.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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