McCormick reports a good first quarter

March 15, 1995|By Kim Clark | Kim Clark,Sun Staff Writer

McCormick & Co. Inc. reported moderately higher first-quarter sales and profits yesterday as growing demand for spices overseas offset losses in Mexico.

Net income for the three months that ended Feb. 28 was $19.3 million, or 24 cents per share, up 5.7 percent from the same period in the previous year.

"We're pretty pleased," said Robert G. Davey, chief financial officer of the Sparks-based company.

First-quarter sales for the world's largest spice maker rose 16 percent, to $425.4 million.

Mr. Davey said a little more than one-third of the sales increase was due to new spice and food businesses bought last year. Most of the rest of the gains came from an increase in the volume of spices and flavorings sold around the world, he said. McCormick also benefited from a retail price increase "in the low single digits," he said.

But earnings were hurt by a $5.5 million increase in interest expense caused by higher interest rates and debt the company took on to make acquisitions last year. McCormick paid $13.6 million in interest in the most recent quarter.

In addition, the company's joint ventures, which include Mexico's leading mayonnaise maker, reported losing nearly $800,000, compared to a $1 million profit in the first quarter a year ago. The Mexican peso's sharp decline against the dollar makes earnings in Mexico worth less in dollar terms. Some of that loss was offset by currency hedges, Mr. Davey said.

Mr. Davey said the company is trying to protect itself against further losses in Mexico by raising its prices in that country and seeking out new supplies and spices that it can buy with its pesos in Mexico.

The company has no plans to shut down its Mexican operations, he said. McCormick has done business in Mexico for 49 years, he said, and has seen other fiscal crises come and go.

Investors reacted calmly to yesterday's income announcement, sending the stock down 6.25 cents to close at $22.25 in quiet trading.

Nomi Ghez, who follows McCormick's stock for Goldman, Sachs & Co. in New York, said the report painted a mixed picture. There is growing demand for spices by food companies around the world, and also by European consumers. But retail sales in the United States are flat, and Mexican sales and profits could fall off if that country's economy does not improve, she said.

The company's annual shareholders meeting will be at 10 a.m. today at the Hunt Valley Marriott.

McCormick & Co. Inc. ... ... ... ... ... ... Ticker ... ... . ... Yesterday's

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

... ... ... ... ... ... ... ... .. MCCRK ... .. .. .. 22 1/4 .. .. .. -1/16

Period ended

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

Revenue ... ... ... ... ... ... .. $425,433 ... ... ... $367,723 . +15.7%

Net Income ... ... ... ... ... ... $19,346 ... .. .. .. $18,310 ... +5.7%

Primary EPS ... ... ... ... ... .. $0.24 ... ... ... .. $0.23 .. .. +4.3%

Figures in thousands (except per share data.)

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