McCormick plans to launch organic recipe mixes, organic stock, food colors with no artificial dyes, Zatarain’s microwavable rice cups and Grill Mates liquid marinades.

SPARKS, MD. — Coming soon from McCormick & Co., Inc. are organic recipe mixes, organic stock and food colors with no artificial dyes. The company also is set to introduce Zatarain’s microwavable rice cups and Grill Mates liquid marinades. New product innovation helped McCormick achieve solid top-line growth in the recent quarter.

For the first quarter ended Feb. 29, McCormick net income was $93.4 million, equal to 73c per share on the common stock, up 32% from $70.5 million, or 55c per share, for the prior-year period. Net sales were $1,030.2 million, up 2% from $1,010.4 million. In constant currency, sales grew 7%.

Lawrence Kurzius, McCormick
Lawrence Kurzius, president and c.e.o. of McCormick

“We grew constant currency sales 6% for our Consumer segment and 7% for our Industrial segment with increased base business, new products and acquisitions our three drivers of long-term sales growth,” said Lawrence Kurzius, president and chief executive officer, during a March 29 earnings call with financial analysts. “Clearly McCormick is in a great position with a portfolio of leading brands and industrial flavor solutions that are aligned with today’s consumer and developing the insights to adapt to tomorrow’s consumer.”

Consumer segment operating income was $93 million, up 29% from $72.3 million in the comparable quarter, as sales growth and cost savings more than offset higher material costs and employee benefit expense. Segment sales advanced 2% to $633.8 million from year-ago sales of $620.3 million, as a result of increased volume and product mix and pricing actions taken to offset higher input costs. Constant currency sales advanced more than 6%. Acquisitions completed in the prior year contributed 3 percentage points of year-on-year constant currency growth in the quarter.

“Category growth for spices and seasonings continues to be strong,” Mr. Kurzius said. “In the most recent quarter, retail sales of McCormick brand spices and seasonings continued to grow, reaching a 5% increase. Within this broader category, we grew our core McCormick brand spices and herbs at the category growth rate and we continue to see strong growth for our gourmet products, with retail sales up 6% since our 2015 re-launch.”

Retail sales of McCormick brand spices and seasonings continue to grow.

Industrial segment operating income rose 69% to $36.1 million from $21.4 million, as higher sales, cost savings and a shift toward more value-added products more than offset increases in material costs and employee benefits expense. Industrial segment sales increased 2% to $396.4 million from year-ago sales of $390.1 million, driven by higher volume and product mix, as well as pricing actions taken to offset higher input costs. Constant currency sales rose nearly 7%. Acquisitions completed in 2015 contributed 2 percentage points of growth in the quarter.

“Leading our Industrial performance again this quarter with another double-digit sales increase in constant currency was our team in EMEA,” Mr. Kurzius said. “In this region the greatest growth is with quick-service restaurants through product innovation, distribution gains and their geographic expansion.”

For the full year, the company expects sales growth in constant currency of 4% to 6%, driven by base business increases, new product launches, pricing and acquisitions completed in 2015. Including the unfavorable impact of foreign currency exchange, sales growth is projected at 1% to 3%. Management expects to generate cost savings of at least $95 million that will lead to improved margins and accelerated brand marketing. Additionally, adjusted earnings per share are projected to grow 6% to 8% over adjusted earnings per share of $3.48 in fiscal 2015.

McCormick is in the process of labeling more than 70% of McCormick branded spices, herbs and extracts as non-G.M.O. and is transitioning 80% of its gourmet line to organic this year.

Expected to help drive continued momentum in McCormick’s branded business is a focus on organic and non-bioengineered ingredients. The company is in the process of labeling more than 70% of McCormick branded spices, herbs and extracts as non-G.M.O. and is transitioning 80% of its gourmet line to organic this year. Asked how the company plans to respond to the Vermont law requiring the labeling of products containing genetically modified ingredients, Mr. Kurzius said most of McCormick’s products are not genetically modified.

“We are taking credit for what we have to a great extent,” he said. “The vast majority of our products, our herbs and spice products in particular, are not genetically modified in any way, and consumers are interested in transparency and that's what led to that initiative. And we are certainly well aware of the Vermont law.

“We don’t have any kind of particular public stance that we want to take on that other than that we are going to comply with the law. So where there are genetically modified materials in some of our products, we will either find a way to remove them or label them as is appropriate in order to put us into compliance with that law.”