McCormick profit up 5.1% at $48 million for quarter Period is 5th straight for earnings growth

Condiments

January 15, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

McCormick & Co. Inc. said yesterday that fourth-quarter net income rose 5.1 percent, marking the spice giant's fifth straight quarter of earnings growth.

For the three months ended Nov. 30, Sparks-based McCormick reported net income of $48.2 million, up from $45.8 million in the year-ago quarter. On a per-share basis, McCormick reported earnings of 65 cents -- up 12 percent from 58 cents. Sales for the quarter were about $557 million, up 3.6 percent from $537 million.

Robert J. Lawless, president and chief executive, said most of the company's business units posted quarterly gains.

"While U.S. consumer sales were off somewhat for the quarter, we are confident that recently introduced initiatives will rekindle growth over time," he said. "Our food service and industrial businesses continue to perform well, and our packaging group had a particularly strong quarter."

Lawless called 1997 a year of growth for the company, and said McCormick would seek to build on that.

"We are going to be very aggressive about going after acquisitions throughout the world," he said.

"We don't have one right now that we're close to writing a check on," said Robert G. Davey, chief financial officer and executive vice president. "But it's possible we can do one this year."

For the year, McCormick reported net income of $98.4 million, up 135 percent from $41.9 million. Sales were $1.8 billion, up 4 percent from $1.73 billion. On a per-share basis, McCormick reported earnings of $1.30, up 160 percent from 50 cents.

"For the year, they did what their people thought they would," said John McMillin, a Prudential Securities analyst. "This is a company that is getting its act together."

He said the company appears more under control than it was a year or two ago, when it was battling to stave off a challenge by Australian upstart Burns Philp & Co. Sydney-based Burns Philp remains a competitor, but not the threat to McCormick that it once was.

McMillin expressed some disappointment with McCormick's weak consumer sales in the United States, but he said the company is taking measures to boost sales. Those initiatives include pressuring retailers to cut prices on fast-selling spices -- such as salt, pepper and garlic -- as a response to competition from drugstores and shopping clubs.

Investors also appear to be keener on McCormick. The company's shares closed yesterday at $29.875, down 31.25 cents. But that was one day after they traded at $30.875 -- a record high.

McCormick officials said yesterday that they were comfortable with analysts' 1998 target of earnings per share between $1.45 and $1.50.

"The stock has made a good move," said McMillin, one of the company's toughest critics during earlier struggles. "We're sticking with a 'buy' rating."

Pub Date: 1/15/98

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