Lawry's acquisition helps boost McCormick profit 12%

by Staff
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SPARKS, MD. — Earnings at McCormick & Co. climbed 12% in the first quarter of fiscal 2009, boosted in large part to the Lawry’s spice business acquired last year as well as a shift to more consumers cooking at home.

Net income in the first quarter ended Feb. 28 totaled $57.7 million, equal to 44c per share on the common stock, up from $51.4 million, or 40c per share, in the same period a year ago. Net sales, meanwhile, eased 1% to $718.5 million, down from $724 million.

""We are very pleased that we have been able to deliver increased profits in a tough economy," said Alan D. Wilson, president and chief executive officer. "A portion of the first-quarter profit increase is due to Lawry’s, which has been a great addition to our portfolio of leading brands. The integration of this business is nearly complete and we are now poised to launch a comprehensive marketing program behind Lawry’s. We are achieving sales growth in a number of other product lines that help families prepare value-priced meals that taste great.

"We are continuing to shift our marketing emphasis toward those products that offer value and convenience as consumers eat more meals at home."

Operating income in the company’s Consumer Business totaled $74 million, up 15% from $64.4 million from the same period a year ago. Sales in the segment rose to $420.6 million from $410.5 million.

"While the company grew sales of dry seasoning mixes, Hispanic products and value-priced items, sales of gourmet items and seafood seasonings were lower this period," the company said. "In addition, consumer purchases exceeded the unit volume of products sold to customers, as certain retailers worked to lower their inventory levels following strong purchases for the fourth-quarter holiday period."

Operating income in the Industrial Business rose 22% to $15.8 million, while sales eased to $297.9 million from $313.5 million.

Mr. Wilson said McCormick’s efforts to lower expenses and manage costs are ongoing. He said the company’s Comprehensive Continuous Improvement program and restructuring actions are on track to deliver $30 million in cost reductions in fiscal 2009.

McCormick reaffirmed its earnings-per-share guidance for 2009 of $2.24 to $2.28, including 5c per share in restructuring costs. But the company cautioned that sales growth may come in at the lower end of its prior range of 2% to 4%, which would put sales for the year at approximately $3.24 billion to $3.30 billion.

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