McCormick posts 11.9% profit rise

January 11, 1994|By Ross Hetrick | Ross Hetrick,Staff Writer

Helped by a strong fourth quarter, McCormick & Co. Inc. was able to boost earnings by 11.9 percent for its fiscal year, excluding noncash charges and one-time gains.

"We had a solid performance in the later part of the year," said James A. Hooker, vice president and chief financial officer of the Sparks-based spice and flavoring company. "We're looking for double-digit increases going forward."

McCormick's stock remained unchanged, closing at $24 a share.

Results for the fiscal year that ended Nov. 30 were depressed by a noncash charge of $26.6 million, or 33 cents a share, to comply with an accounting standard that requires companies to record future expenses for retiree benefits. That charge was recorded retroactively to the first quarter.

Excluding the post-retirement charge, increased federal income taxes and a one-time gain in the previous fiscal year, net income rose to $104.4 million, or $1.28 a share, compared to $93.3 million, or 1.14 a share, for 1992 fiscal year. Sales during the year increased 5.8 percent to $1.6 billion.

The company was particularly helped by a 15.7 percent increase in its fourth-quarter earnings, boosting net income to $40.5 million, or 50 cents a share.

The results were helped by strong results in the company's international, industrial and packaging divisions, Mr. Hooker said. Domestically, we were not as strong as we would have liked," he said, attributing the disappointment to increased competition and a sluggish economy in some parts of the country, particularly California.

Despite the jump in earnings, the company fell short of its goal of increasing earnings by 15 percent annually. Still, the company -- was pleased.

"We had a successful year despite high cost onion inventories, unfavorable foreign exchange rates and weak economic conditions in many of our markets," Bailey A. Thomas, McCormick's chairman and chief executive officer, said in a statement. "We expect 1994 to be another good year for McCormick & Co."

Earlier in the year, McCormick profits were hurt by the performance of its Gilroy Food subsidiary, which produces dehydrated onions. That operation was hurt by a drop in its last onion harvest caused by a planned cutback and poor weather.

Analysts said the results were within their expectations and were favorable in light of the increasingly competitive food market. "All things considered, the numbers are more than satisfactory," said David S. Leibowitz, senior vice president and director of research for Republic New York Securities.

Like other food companies, McCormick has been competing against house and private brands by holding down prices, said Richard H. Davis, managing director of Wessels Arnold & Henderson, a Minneapolis investment banking firm. But he expects McCormick's earnings to increase about 15 percent this year.

McCormick & Co. Inc.

Ticker ..... Yesterday's

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

MCCRK ....... 24 .... Unch.

Period ended

Nov. 30 ........ 4th qtr. .... Year ago .... Chg.

Revenue ......... $460,753 .... $452,171 .... +1.9%

Net Income ...... $40,513* ..... $35,022 .... +15.7%

Primary EPS ....... $0.50* ....... $0.43 .... +16.3%

........... ..... Year ........ Year ago .... Chg.

Revenue ...... $1,556,566 .... $1,471,369 ... +5.8%

Net Income .... $73,054** .... $95,217*** ... -23.3%

Primary EPS ..... $0.89** ...... $1.16*** ... -23.3%

Figures in thousands (except per-share data.)

* Includes a charge to earnings of $1.2 million, or 2 cents a share, for post-retirement benefits and increased federal income tax rate.

** Includes a charge to earnings of $31.3 million, or 39 cents a share, for changes in accounting rules, current post-retirement benefits and increased federal income tax.

*** Includes $1.9 million, or 2 cents a share, from the sale of industrial cleaning supply business.

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