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13 Nov 2003
MOODY'S CONFIRMS RATINGS OF ANHEUSER-BUSCH COMPANIES, INC. (SENIOR AT A1/P-1); CHANGES OUTLOOK TO STABLE FROM POSITIVE AND ASSIGNS BANK LOAN RATING AT A1
New York, November 13, 2003 -- Moody's confirmed the A1/Prime-1 ratings of Anheuser-Busch
Companies, Inc. (BUD) and changed the rating outlook to stable
from positive, as well as assigning an A1 rating to the company's
$2 billion bank revolving credit facility.
The change in outlook to stable reflects the fact that, although
BUD's valuable beer franchise and cash flow from operations continue
to strengthen, the company's long-articulated financial
policy of maintaining gross cash flow to debt in the 30 to 40%
range results in ongoing debt financed share repurchases. Thus,
as the company's cash flows grow, total debt continues to
creep upward, while retained cash flow measures after share repurchases
are not consistent with the Aa rating category. Retained cash flow
after Capex, dividends and repurchases is consistently negative
and share repurchases have accelerated in recent years, to about
$2 billion in 2002 and 2003
BUD's A1 rating reflects its strong leadership position in the US
beer market with a share that has grown to 50%, steadily
improving profitability, large and growing cash flows, and
a conservative approach to acquisitions to date. BUD has considerable
competitive advantages, including highly efficient production facilities;
pricing leadership; substantial economies of scale; successful
marketing and sales programs and effective advertising creative;
the industry's strongest portfolio of brands; and a solid dedicated
distribution network. The company has very strong operating performance
and faces an attractive demographic environment for its product for the
foreseeable future. All of these strengths position the company
solidly in the A1 rating category.
The stable outlook reflects the fact that, with the company's
current financial policy, an upgrade is unlikely over the intermediate
term despite BUD's many credit strengths. The stable outlook
also assumes that the company would voluntarily scale back on share repurchases
in the event of a softening of performance, or a large debt financed
acquisition. Longer term, upward rating movement would likely
require a shift to a more conservative financial management metric as
regards measures of retained and free cash flow to debt. A downgrade
is unlikely given the strong and consistent performance record of the
company and the relatively conservative approach of the management team.
Any downward rating movement would most likely be event driven (such as
a large debt financed acquisition) or follow an unexpected and dramatic
downward shift in the profitability of the business.
The following ratings were confirmed
Senior Long-Term debt at A1
Rating of the company for short-term issuance at prime-1
The following rating was assigned:
Bank Credit Facility at A1
BUD, based in St. Louis, MO is the world's leading
beer company by volume. It also has packaging and entertainment
Corporate Finance Group
Moody's Investors Service
Senior Vice President
Corporate Finance Group
Moody's Investors Service
No Related Data.
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