McCormick & Co. Inc. has scooped up several competitors in recent years, and the dividends have paid off handsomely enough that the Sparks-based spice maker said it plans to acquire even more rivals.
During the company's annual meeting yesterday, Robert J. Lawless, McCormick's chairman, president and chief executive officer, told about 1,000 shareholders at the Marriott Hunt Valley Inn that the company is looking for businesses to buy.
"We are interested in acquiring strong brands that take us into new markets or niche products that fit well in our overall portfolio," Lawless said. "And we will keep searching."
The acquisitions of Zatarain's New Orleans rice products for $180 million in 2003, of Dutch spice and herb maker C.M. van Sillevoldt BV for $73.6 million in November and of Paris-based spice maker Ducros for $324 million in 2000 helped drive a 15 percent increase in net sales in the company's consumer business last year.
Sales of Zatarain's increased 20 percent in the United States last year.
Lawless said the boost in sales also results from the popularity of new products. Products launched during the past three years accounted for 6 percent of last year's sales, he said.
Worldwide sales of the company's Grinders collection - spices that can be ground into fine particles - increased 36 percent. McCormick plans to introduce more Grinders flavors this year and improve on the bottle design.
Sales of the company's line of Griller spices grew 8 percent worldwide.
"The grilling season is no longer just three months of the summer, and we owe a lot of that to George Foreman," said Lawless, referring to the former heavyweight boxing champion who has made a fortune on his signature indoor grilling appliances.
Lawless said yesterday that the company will also expand further into the Hispanic market, including increased advertising to Hispanic consumers.
McCormick's top executive also addressed the impact an investment in vanilla beans has had on the company's earnings. In 2003, the company made bulk purchases of vanilla to avoid paying high prices later. Vanilla prices rose to nearly $240 a pound that year because of unfavorable weather in Madagascar. The price unexpectedly dropped a year later to $30 per pound.
Tuesday, McCormick said earnings in its fiscal first quarter, which ended Feb. 28, fell 5.4 percent, to $36 million, or 26 cents a share, from $38 million, or 27 cents a share a year earlier, because of the miscalculation in vanilla prices. But Lawless assured the audience that performance would start to even out by the second half of this year.
"It does not matter to your company's management team whether such issues are within our control or not," Lawless said. "We must perform. We believe the market reaction will be temporary. Our focus is on the longer-term perspective, which we believe is very positive."
The company also announced yesterday that it will pay a quarterly dividend of 16 cents a share on its common stock, payable April 15 to shareholders of record April 4. The company said this is its 81st year of consecutive dividend payments.
McCormick stock rose 80 cents, or about 2 percent, to close at $35.01 on the New York Stock Exchange yesterday.
Shareholders attending yesterday's meeting seemed pleased with the company's performance overall. Few questions were asked of the executives.
Like a typical McCormick annual meeting, yesterday's attracted a standing-room audience of about 1,000 people. Many shareholders have owned McCormick stock for years, and others come for a gift bag, filled with the company's latest products, that is distributed to shareholders.
Ed Miller, 77, and his wife, Anna, 75, of Catonsville have owned McCormick stock for at least 15 years. The retired couple once ran a construction business.
"That's what is providing for our retirement," Ed Miller said. "I'm not afraid to call the executives up and give them a piece of my mind. But I have no complaints right now. They seem to be doing a good job."