Seasoning-and-flavor producer McCormick & Co. (MKC) is pushing through some bland times, financially that is.
Higher packaging and raw-materials costs took a little of the zing out of sales revenue during the first quarter of 2011. Yet the spice company was able to raise prices to offset that trend and turn a profit. For the first quarter of 2011, McCormick net sales were up 3 percent at $782.8 million.
Net income, however, rose 13 percent to $76.8 million, with earnings per share rising 12 percent to 57 cents from 51 cents in the first quarter of 2010. That result beat expectations, thanks to higher operating income as well as an increase in income from unconsolidated operations.
Cost cutting helped the company report an increase in operating income. Higher prices helped as well.
"We are operating effectively in a tough environment as demonstrated by our first-quarter results. In response to a significant increase in raw and packaging material costs, we now have pricing actions in place on a majority of our products," says Chairman, President, and CEO Alan D. Wilson.
For fiscal year 2011, McCormick the company is sticking with its targets, forecasting earnings per share of $2.80 to $2.85. Those predictions are in line with market expectations. Analysts are expecting McCormick to report earnings per share of $2.83.
Looking for growth
Sales are projected to grow 5 percent to 7 percent in local currency with an additional 1 percent of growth seen coming from favorable foreign currency exchange rates.
"Underlying the 5-to-7 percent sales increase is an estimated 3 percent from pricing actions to help offset higher material costs, and 2 to 4 percent from favorable volume and product mix," the company says in an earnings statement.
Further cost-cutting measures will help boost the bottom line, the company adds.
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