Poor onion crop slices earnings at McCormick 2nd-quarter income up but below goal

June 15, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

The onion business is continuing to bring tears to the eyes of McCormick & Co. Inc.

A poor onion crop at a California subsidiary and the continuing economic doldrums held back earnings growth at the Sparks-based spice and flavorings company.

While income for the second fiscal quarter was up 6 percent -- excluding a one-time gain of $1.9 million for the sale of a cleaning supply company during last year's second quarter -- it was below the 15 percent annual growth the company is seeking in its per-share earnings.

The stock market reacted strongly to yesterday's news, as McCormick's stock dropped $2.25 a share to close at $20.50 a share. The stock's high point was on Dec. 31, when McCormick sold for $30.25 a share.

One of the main culprits has been a drop in onion production at the company's Gilroy's Food subsidiary. Because of an oversupply in 1991, Gilroy planted fewer onions last year. The crop was further diminished by poor weather, said James A. Hooker, vice president and chief financial officer for McCormick.

Profits were also hurt by the lingering economic slowdown in the United States and Europe, he said.

"It clearly proved to be a disappointment to certain investors," said David S. Leibowitz, senior vice president for American Securities Corp., a New York brokerage. But he said he did not think there was any significant change in the company's core business.

"Long-term, the outlook remains positive," Mr. Leibowitz said.

This performance, along with investors shifting away from food companies, has contributed to a drop in the company's stock price, Mr. Hooker said.

But the company remains hopeful that it will be able to meet the 15 percent annual growth target by the end of the year, he said.

McCormick & Co. Inc.

.. .. .. .. .. .. .. Ticker.. .. .. .. .. Yesterday's

xTC .. .. .. .. .. .. ..Symbol.. .. .. .. .. Cls.. .. .. .. ..Chg.

.. .. .. .. .. .. .. MCCRK .. .. .. .. .. 20 1/2 .. .. .. .. ...-2 1/4

Period ended

May 31 .. .. .. .. ..2nd qtr.. .. .. .. .. Year ago.. .. .. Chg.

Revenue .. .. .. .. $361,300 .. .. .. .. ..$336,643.. .. .+7.3%

Net Income .. .. .. $18,093.. .. .. .. .. $18,948*.. .. ..-4.5%

Primary EPS .. .. .. .$0.22 .. .. .. .. .. .. $0.23*.. .. -4.3%

.. .. .. .. .. ..6 mos.. .. .. Year ago.. .. .. .. .. .. Chg.

Revenue .. .. ..$700,885.. .. $658,898.. .. .. .. .. .. +6.4%

Net Income .. ..$35,914 .. .. $36,272*.. .. .. .. .. ...-1.0%

Primary EPS.. .. $0.44.. .. .. $0.44*.. .. .. .. .. ...-0.0%

Figures in thousands (except per share data).

* Includes gain on sale of industrial cleaning supply business of

$1.9 million, or 2 cents per share.

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