McCormick starts off new year with zest

March 15, 1994|By Kim Clark | Kim Clark,Sun Staff Writer

McCormick & Co. Inc. reported a strong increase in first-quarter earnings yesterday, thanks to growing Asian demand and an increase in the industrial market for spices in the United States.

The Sparks-based spice and flavorings company said sales were up 8 percent to $367.7 million, and operating profits were up 20 percent to $36.2 million in the quarter ended Feb. 28.

McCormick reported earning a net profit of $18.3 million in its fiscal first quarter of 1994, compared to a $9.4 million loss in the same period a year ago.

Last year, the company took a $26.6 million charge to reflect a change in the way it accounted for retirees' health benefits.

McCormick is the nation's biggest spice company, accounting for about 40 percent of the U.S. spice sales.

James A. Hooker, McCormick's chief financial officer, said yesterday that the company has benefited from a rebound in the U.S. economy, and is looking for long-term growth in Asia, where it has been expanding by acquiring stakes in local companies.

Mr. Hooker said part of the increase in McCormick's sales stemmed from growth in demand for rotisserie chicken from fast-food restaurants.

But, he said, the company is facing an increasingly competitive market for its mayonnaise in Mexico, where it is the most popular brand. McCormick is nevertheless moving ahead by introducing the condiment to stores in the western United States and the Philippines, Mr. Hooker said.

Analysts said that the quarter's performance showed that while the spectacular growth of the 1980s may be over, McCormick was still showing steady improvement.

"It is less exciting than a few years ago," said John M. McMillin, who follows McCormick stock for Prudential Securities Research in New York. But, he said, McCormick was still outperforming many other food companies.

Kurt Funderburg, an equities analyst for Ferris Baker Watts in Baltimore, said McCormick's growth has been slowed because its biggest competitor, the company that owns Durkee and Spice Island brand spices, has emerged from several years of disarray and has started to compete aggressively for supermarket shelf space.

"It is more difficult for them to gain market share," Mr. Funderburg said.

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

& Co. Inc. ..... ...... Symbol ...... ...... Cls. Chg.

.......... ..... ...... MCCRK ....... ...... 22 ... + 1/2

Period ended

2/28/94 ....... ..... 1st qtr. ..... Year ago .... Chg.

Revenue ....... ..... $367,723 ..... $339,585 ... +8.3%

Net Income .... ...... $18,310 ..... $(9,362) ..... --

Primary EPS ... ........ $0.23 ...... $(0.12) ..... --

Figures in thousands (except per share data.)

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