McCormick profit up sharply in first quarter

by Eric Schroeder
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SPARKS, MD. — A combination of stronger sales and a more favorable business mix helped drive a sharp gain in earnings at McCormick & Co. during the first quarter of fiscal 2007.

For the first quarter ended Feb. 28, McCormick posted net income of $44,228,000, equal to 34c per share on the common stock, up from $14,388,000, or 11c per share, in the same period last year.

Net sales for the quarter rose 7%, to $652,639,000. Consumer business accounted for approximately 57% of net sales, totaling $374,769,000, while industrial business contributed the other 43% with $344,764,000 in sales.

Commenting on sales in its consumer business, McCormick said the increase was driven in large part by higher volume and pricing actions. The higher volume was the result of incremental sales of Simply Asia Foods, which was acquired in mid-2006, new products and effective marketing programs.

Operating income in McCormick’s consumer business rose 121% to $54,842,000, while operating income in the industrial business was $11,509,000, up from a loss of $575,000 in the first quarter of fiscal 2006.

"With our first-quarter financial results, fiscal year 2007 is off to a great start," said Robert J. Lawless, chairman, president and chief executive officer. "The restructuring actions begun in late 2005 are delivering significant cost savings and sustainable margin improvement. Initiatives to grow our business are driving sales in a number of our regions around the world."

Following the strong first quarter, McCormick said it remains on track to achieve 2007 earnings-per-share profit at the high end of its $1.61 to $1.71 range. The guidance is based on a goal of 8% to 10% growth in per-share profit for the year, a pace McCormick exceeded during the first quarter.

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