McCormick now ready for growth, CEO says Aggressive '96 moves 'laid the foundation'

March 20, 1997|By Sean Somerville | Sean Somerville,SUN STAFF

McCormick & Co. Inc.'s new chief executive told shareholders yesterday that 1996 was "the year of the turnaround" and that the Sparks-based spice company is poised for growth.

"We feel a strength that runs through the entire business," said Robert J. Lawless, the company's president, who succeeded Charles P. "Buzz" McCormick Jr. as CEO on Jan. 1.

At an annual meeting in Hunt Valley that was more upbeat than last year's, McCormick's management outlined efforts in 1996 to stave off challenges and make the company more competitive.

"What a difference a year makes," said McCormick, who remains as the company's chairman.

At last year's annual meeting, the company had just reported a 50 percent decline in quarterly earnings. McCormick was fending off an assault for market share by Australian rival Burns Philp & Co. Part of the company's answer was to encourage retailers to cut prices of some products.

Since then, McCormick has completed a review of its holdings that resulted in the $263 million sales of California-based Gilroy

TC Foods -- its onion and garlic business -- and Gilroy Energy Company, a co-generation plant that supplied power for Gilroy Foods.

McCormick also took a $60 million charge to end product lines, sell underperforming businesses and close a New York packaging plant. The company also announced it would buy back $10 million in stock. Without naming Burns Philp, McCormick yesterday said that it had won the "spice war." The price-cutting experiment continues.

Analysts say McCormick has shown signs of a successful turnaround, especially by stringing together two quarters of earnings growth. But they say the company is still at a "show-me" stage.

At a meeting crowded with about 900 shareholders, McCormick, the chairman, likened the sale of the Gilroy properties to the company's divestiture of vast real estate holdings at the height of the market in 1989. He said the company reached its goal of returning to growth in the second half of last year.

"Given the cards we were dealt, I look back at 1996 believing that we accomplished everything we set out to do," he said.

Lawless told shareholders that an increased investment in advertising increased sales of Bag'n'Season and Grill Mates products by 40 percent.

"We came out of a tough 1996 really poised to identify and support areas for growth," he said. "We have laid the foundation."

After the meeting, Lawless said the company has no acquisitions immediately planned. "But acquisitions will be a key component of our growth strategy for the future," he said.

McCormick returned from retirement to become CEO at the beginning of 1996 after H. Eugene Blattman resigned because of heart problems. In 1996, McCormick received no salary but a $195,300 bonus and a $600,000 consulting fee, according to the company's proxy statement.

Lawless, who was president and chief operating officer in 1996, received a 73 percent increase in total annual compensation, from $279,598 to $483,107. His salary, which was $239,567 in 1995, increased last year to $359,567. His bonus climbed from $40,031 to $123,540.

Pub Date: 3/20/97

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