updated 4/27/2005 2:41:36 PM ET 2005-04-27T18:41:36

Anheuser-Busch Cos. said Wednesday that first-quarter earnings dropped 6.7 percent due to higher costs and lower beer sales in the United States.

Net income dipped to $513 million, or 65 cents per share, from $550 million, or 67 cents per share, a year ago. Excluding a gain on the sale of a Spanish theme park, the company earned 63 cents per share in the latest quarter.

Total sales for the St. Louis-based producer of top-selling Budweiser and Bud Light rose 2.5 percent to $3.56 billion from $3.48 billion last year, driven primarily by a 29 percent increase in international beer net sales. Those sales were up after the acquisition last year of north China brewer Harbin Brewery Group Ltd., a century-old beermaker, higher entertainment segment sales and increased commodity-based sales from packaging operations.

Analysts surveyed by Thomson Financial were looking for the company to post earnings of 63 cents per share on sales of $3.53 billion in the latest quarter.

Long a Wall Street darling for churning out double-digit earnings per share quarter after quarter, the nation's largest brewer has fallen on flatter times as it duels to defend its market share against rival Miller and increasing consumer thirst for wine and distilled spirits. Anheuser-Busch had said its 2005 profits would grow in the low single digits.

Domestic beer sales decreased 1.3 percent on lower beer sales volume, partially offset by higher revenue per barrel. Worldwide Anheuser-Busch beer sales volume for the first quarter 2005 rose 6.6 percent, to 28.8 million barrels, from the first quarter of 2004.

"Anheuser-Busch had a challenging first quarter in its domestic beer business," said Patrick Stokes, president and chief executive officer. "The domestic beer industry and Anheuser-Busch experienced volume declines and higher commodity cost pressures."

The company said it has a number of initiatives in place to drive beer volume growth, including introduction of new products, led by Budweiser Select, increased investments in domestic marketing, stepped up on-premise sales initiatives, new packaging and price promotions.

As wine and distilled spirits continue to gain bigger shares of the alcoholic beverage market, Anheuser-Busch in recent months has bumped up its marketing in hopes of boosting its volume of U.S. beer shipments.

In February, Anheuser-Busch nationally launched Budweiser Select, a low-carb, low-calorie cousin of Budweiser and Bud Light with a darker color and crisper finish.

A month earlier, Anheuser-Busch rolled out B-to-the-E to go head-to-head with classic mixed drinks — traditional suds spiked with caffeine, fruit flavoring, herbal guarana and ginseng. That new brew came as Anheuser-Busch and other beermakers seek to piggyback strides liquor companies have made in luring young consumers to flavored and mixed drinks.

Earlier this month, Anheuser-Busch launched a watermelon-spiked addition to its Bacardi Silver lineup of liquor-branded flavored malt beverages, which already include versions of black cherry orange, raspberry and lemon, to give a warm-weather boost to a company with suddenly sluggish sales.

Bacardi Silver Watermelon is the latest flavored malt beverage, or "malternative," whose sweet taste is expected to appeal to people in the 21-27 age group.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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