Strong sales growth boosts McCormick profit
June 27, 2012
SPARKS, MD. — A double-digit increase in sales helped spur a 9% gain in earnings at McCormick & Co., Inc. during the second quarter. Net income in the quarter ended May 31 was $80.4 million, equal to 61c per share on the common stock, up from $73.6 million, or 56c per share, in the same period a year ago.
Sales for the quarter were $984 million, up 11% from $883.7 million.
“We achieved a double-digit increase in sales and strong profit growth in our second quarter,” said Alan D. Wilson, president and chief executive officer. “In a difficult economic environment, McCormick is delivering financial results that demonstrate the strength of our brands and our customer relationships in markets around the world. Acquisitions, new products, marketing programs and expanded distribution are driving sales growth in each geographic region, with particular strength in emerging markets which accounted for 14% of second-quarter sales.
“Across all of our businesses, we continue to face volatile material costs. As reflected in our gross profit margin, which was comparable with the second quarter of 2011, our pricing actions and cost savings from our Comprehensive Continuous Improvement (CCI) program are effectively offsetting the impact of higher material costs. CCI is also helping to fuel our growth and through the first half of 2012, we increased our brand marketing support by 15%. This increase, along with product innovation and other initiatives to grow sales, have created momentum as we head into the second half of 2012.”
Operating income within the Consumer Business segment increased 15% to $88.6 million from $77 million in the same period a year ago. Sales rose 14% to $568.8 million from $499 million.
In the company’s Industrial Business, operating income increased narrowly to $32.7 million from $32.3 million, while sales rose 8% to $415.2 million from $384.7 million. McCormick said it experienced growing demand for its customized seasoning blends in the United States, Canada and Mexico during the quarter.
For the six months ended May 31 net income was $154.9 million, or $1.17 per share, up 3% from $150.4 million, or $1.13 per share, in the same period a year ago. Net sales were $1,890.7 million, up 13% from $1,666.5 million.
Looking ahead to the remainder of the year, McCormick reaffirmed its projected sales growth of 9% to 11%, which includes an estimated 4% contribution from acquisitions completed in 2011. The company also reaffirmed its outlook for operating income growth of 9% to 11%, which includes approximately $15 million of incremental brand marketing support.