McCormick gets boost from cost savings, higher sales

by Staff
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SPARKS, MD. — Increased sales as well as cost savings and efficiency efforts contributed to a 9% increase in income during fiscal 2012 at McCormick & Co., Inc.

For the year ended Nov. 30, 2012, the company had income of $407.8 million, equal to $3.07 per share on the common stock, which compared with income of $374.2 million, or $2.82 per share, during the previous year. Sales during the year were $4,014.2 million, up 9% from $3,697.6 million during the previous year.

“We had a number of noteworthy accomplishments in 2012,” said Alan D. Wilson, chairman, president and chief executive officer. “We launched more than 250 new branded items globally and expanded our innovation facilities and capabilities in five countries. We invested nearly $200 million in brand marketing support, twice what we spent in 2005.  Including the impact of acquisitions completed in 2011, we took our percentage of sales in emerging markets to 14% in 2012, up from 10% in 2011. Cost savings from our Comprehensive Continuous Improvement program – C.C.I. – reached $56 million. Higher sales and our C.C.I. program led to a 7% increase in operating income and a 9% increase in earnings per share, which also included the benefit of a lower tax rate. With higher profits, as well as improved working capital, we generated a record cash flow in 2012. We returned $297 million of cash to shareholders through dividends and share repurchases, bringing the cumulative five-year total to nearly $1 billion.”

In November 2012, McCormick’s board approved a 10% increase in the dividend, its 27th consecutive annual increase.

Net income in the fourth quarter increased 13% to $148.5 million, or $1.12 per share, up from $131.7 million, or 99c per share, during the same time a year ago. Sales for the year were $1,145.8 million, up 3% from $1,110.7 million during the previous year.

The company said 2013 earnings per share are expected to be in the range of $3.15 to $3.23.

“As we look ahead to 2013, our growth initiatives are expected to drive a strong increase in sales,” Mr. Wilson said. “While we expect higher sales and C.C.I. cost savings to drive underlying profit growth at a double-digit rate, we expect this growth to be impacted by year-on-year increases in our retirement benefit costs and tax rate.  Importantly, we do not regard the headwinds from these increases as an impediment to achieving our long-term growth outlook in 2014 and beyond.”
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