Spice maker stock jumps

One day after good earnings news, shares go up $4.125

Annual meeting

March 16, 2000|By Kristine Henry | Kristine Henry,SUN STAFF

Robert J. Lawless, the head of McCormick & Co. Inc., welcomed an audience of about 1,000 yesterday morning to "the first annual shareholder meeting of the 21st century of McCormick.com."

The good news for Lawless, chief executive officer, president and chairman of the company, is that the joke went over well with the crowd gathered in the ballroom of the Hunt Valley Inn-Marriott. The bad news is that the Sparks-based spice producer's stock would probably be through the roof if that were its real name.

Instead, until recently, it has languished at less than $28 a share, down from more than $34 in October. Yesterday afternoon, it jumped $4.125 to close at $30.3125.

The most frustrating aspect of the stock's price for officials is that the company is performing better than it ever has. McCormick posted record revenue last year of $2 billion and earnings per share of $1.69, excluding special charges. One day before the annual meeting, the company reported a record first quarter with net income of $24 million on sales of $462.4 million.

"We have a wall here we all come and bang our head against on a regular basis," Chief Financial Officer Fran Contino said in an interview.

Yesterday, Contino and Lawless told shareholders that the company is a victim of circumstance -- investors are in love with technology stocks and are avoiding food companies, a view analysts share.

"Ten years ago, the Fidelity Magellan Fund had 3.8 percent of assets invested in technology stocks and 4.6 percent in food and beverage stocks," Lawless said. "By the end of 1999, more than 27 percent of the fund was invested in technology, while the food and beverage stocks had dropped to 0.8 percent of assets. It's like a modern version of the gold rush."

However, he said, McCormick's strong earnings have lessened that blow. The Standard & Poor's food index declined 37 percent over the year, while McCormick's share price was down 7 percent.

"There's a fascination in the market with high-tech and Internet stocks, and most stocks outside of those have basically had lackluster performance," said Kurt Funderburg, an equity analyst at Ferris Baker Watts in Baltimore.

John M. McMillin, who follows McCormick for Prudential Securities in New York, said yesterday's price gain was a "delayed reaction" from Tuesday's first-quarter report and a reflection that food stocks in general got a boost. He noted that companies such as Bestfoods, General Mills and Campbell Soup gained between $1.6875 and $3.3125 yesterday.

On Tuesday, McCormick gained 50 cents to close at $26.1875.

"I was surprised the market yawned at the numbers [Tuesday] because they were terrific," McMillin said. "Sometimes the light goes on all at once."

In business yesterday, shareholders re-elected 10 directors to one-year terms and approved the appointment of Ernst & Young LLP as independent auditors for the company.

The company also reported that Lawless, who added chairman to his title last March when Charles P. "Buzz" McCormick stepped down, earned a salary of $583,033 last year plus a bonus of $786,200. The four other highest-paid executives in the company earned salaries ranging from $285,967 to $380,950. Bonuses for the four totaled $1.2 million.

McCormick's board also approved a quarterly dividend of 19 cents per share on its common stock payable April 13 to shareholders of record March 31. The dividend is the same amount it was last quarter, when it was raised from 17 cents.

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