McCormick sees dip in earnings

January 29, 2009|By Andrea K. Walker | Andrea K. Walker,andrea.walker@baltsun.com

Spice maker McCormick & Co. said yesterday that fourth-quarter earnings fell because of a write-down on a Dutch company it owns and that it expects a challenging year because of unfavorable exchange rates.

The Sparks-based company reported net income of $82.5 million, or 62 cents a share, compared with $87.6 million, or 67 cents a share, for the quarter ended Nov. 30.

The company said acquisitions, product innovation and increased marketing have helped it weather a weak global economy. It bought Lawry's spice company and the Billy Bee honey brand last year. McCormick has also benefited from more people eating at home even as their industrial business, which serves restaurants and other food companies, has suffered.

The company said a write-down on its Silvo brand, which sells spices and herbs in the Netherlands, reduced earnings per share by 15 cents. Earnings per share increased by 12 percent to 9 cents per share in the fourth quarter after eliminating the charge. Sales increased 5 percent to $906.9 million for the quarter.

McCormick said it expects 2009 sales to grow 9 percent to 11 percent as it benefits from the acquisition of Lawry's. However, unfavorable currency rates would make the year challenging, the company said. A stronger dollar hurts currency rates overseas.

The spice maker expects earnings per share in 2009 to increase to a range of $2.24 to $2.28, a 7 percent to 9 percent increase from 2008 after excluding the impact of restructuring charges and other items. Analysts polled by Thomson Reuters estimate earnings of $2.26 per share during 2009.

McCormick is also planning to trim costs by $30 million in 2009, which will include $9 million in savings from continued restructuring, mainly at European manufacturing plants, McCormick's Chief Executive Officer Alan D. Wilson said.

The company doesn't plan job cuts in Baltimore. It has hired 73 people at its Hunt Valley plant since June to accommodate the Lawry's acquisition even as other companies reduced staff.

In a separate announcement, the company said that Robert J. Lawless, McCormick's chairman of the board, will retire from that post March 25. He retired as CEO in January 2008 after more than 30 years with the company. Wilson, who took over then, will become chairman.

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