Cost increases pressure earnings at McCormick

by Staff
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SPARKS, MD. — A one-time gain during the previous-year period and cost increases contributed to a 10% decrease in income during the third quarter for McCormick & Co., Ltd.

For the quarter ended Aug. 31, the company had income of $92 million, equal to 69c per share on the common stock, which compared with income of $102.4 million, or 77c per share, during the same quarter of the previous year. Sales for the quarter were $920.4 million, up 16% from $794.6 million.

“We were pleased to report strong sales growth and solid profit performance this quarter,” said Alan D. Wilson, chairman, president and chief executive officer. “Sales grew at a double-digit rate in both our consumer and industrial segments driven by new products, distribution gains and an increased investment in brand marketing, as well as pricing actions taken in response to higher costs. Employees throughout McCormick are focused on high performance and driving cost savings from our CCI program. This on-going initiative to improve productivity and reduce costs throughout our organization is now expected to deliver at least $50 million of cost savings in 2011.”

For the nine months ended Aug. 31, the company posted income of $242.4 million, or $1.83 per share, up 3% from $236.5 million, or $1.78 per share, during the same period of the previous year. Sales for the period were $2,586.9 million, up 10% from $2,357.4 million.

The company also reaffirmed its guidance of earnings per share of $2.74 to $2.79 for the full-year 2011.

“As we head into our fourth quarter and fiscal year 2012, McCormick is facing further cost increases,” Mr. Wilson said. “These include higher costs for spices and herbs such as pepper and cinnamon as well as other ingredients. We continue to respond to these increases with a combination of pricing actions and our CCI cost savings, and we are on-track to achieve our profit goal for 2011.”

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