McCormick posts record profit

Sales also at new high, buoyed by 2 acquisitions

January 29, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Adding Zatarain's, a line of New Orleans-style packaged foods and spices, and Uniqsauces, a British condiment maker, helped drive McCormick & Co. Inc.'s sales and earnings to record levels last year, the spice maker said yesterday.

Buoyed by a successful strategy of redefining itself as a flavorings company, McCormick said it plans to keep the momentum going this year with new products, new business acquisitions and new retail channels.

McCormick reported fourth-quarter net income from continuing operations of $87.1 million, or 61 cents a share, a 17 percent increase, on sales of $699 million, a 12 percent increase. For the fiscal year, which ended Nov. 30, earnings rose 15 percent to $1.48 a share on sales of $2.3 billion, an 11 percent gain.

Last year's acquisitions of Zatarain's in June and Uniqsauces in January contributed to nearly half of the gain in total sales. Sales were also boosted by favorable currency rates and higher sales in the U.S. consumer business.

Domestic consumer sales rose 15 percent as new products were introduced, including one-step seasonings, pepper grinders and grilling sauces under the Grill Mates line. And sales grew as McCormick products were sold for the first time in Dollar Stores and Food Lion supermarkets, the company said.

"This was really a transition year for the company as we reposition for the future," said Robert J. Lawless, McCormick's chairman, president and chief executive.

Lawless said the company is projecting earnings per share of $1.51 to $1.54 and sales growth of as much as 9 percent this year.

The company is considering acquisitions, Lawless said. "We may see nothing this year, or we may see four," he said. "We just don't know at this point."

McCormick also plans to capitalize on the success of the established Zatarain's name. The company is developing products to be launched under the brand this year and also plans to expand the line's distribution internationally, Lawless said.

McCormick, which has its headquarters in Sparks, said its gross profit margin increased to nearly 40 percent as the company cut costs in areas such as packaging.

The consumer side of the business performed well, but Lawless said he was disappointed in industrial sales, which include sales to food processors, food distributors and restaurants. Industrial sales rose 5 percent for the year, an increase that resulted mainly from the Uniqsauces acquisition and favorable foreign exchange rates, and 4 percent during the fourth quarter.

That segment of the business was hurt by a slowdown in consumer traffic at restaurants and dampened sales to food service distributors, the company said.

McCormick shares fell 77 cents to close at $29.83.

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