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McCormick Finishes 2011 With Strong Fourth Quarter
Posted: January 26, 2012
McCormick & Company reported double-digit sales growth for its fourth quarter and fiscal year ended Nov. 30, 2011. For the year, higher sales and cost savings offset the impact of increased material costs for the company, leading to a 6% increase in operating income and earnings per share of $2.79. For the fourth quarter, the company grew sales 13% and reported earnings per share of $0.98, which included a $0.05 per share unfavorable impact from transaction costs related to the completion of its Kamis acquisition and its Kohinoor joint venture.
For its 2012 fiscal year 2012, McCormick expects to grow sales 9–11% in local currency and achieve earnings per share of $3.01–3.06.
Alan D. Wilson, the company’s chairman, president and CEO, commented, “Our fourth quarter financial results were a strong finish to fiscal year 2011. We grew fourth quarter sales at a double-digit rate and achieved increased operating income in an environment that remains difficult in many of our largest markets. This performance demonstrates the strength of our brands, our ability to innovate and excellent progress with CCI [the company’s Comprehensive Continuous Improvement program].
“At McCormick, 2011 was a year of significant accomplishment. We completed three acquisitions, and the integration of these businesses has gone well. These acquisitions are accelerating our sales and profit growth and have expanded our presence in emerging markets and across several growth platforms. In 2012 we expect at least 13% of sales to come from emerging markets, up from 6% in 2006. Innovation is another key avenue of growth and new products launched in the past three years added 9% to sales in 2011. Cost savings in 2011 from our Comprehensive Continuous Improvement program—CCI—totaled $65 million, ahead of our initial target. Along with our pricing actions, these cost savings provided an offset to increased material costs and also helped fuel a $20 million increase in brand marketing support. I want to recognize employees throughout McCormick for these achievements that drove our growth and helped us navigate a period of volatility in our material costs and weakness in the broad economic environment. During 2011, McCormick shareholders received nearly $150 million of the cash we generated through dividend payments, and in November, the board approved an 11% increase in the quarterly dividend, which was our 26th consecutive year of increase.
“Consumers around the world continue to demand great taste, and we are meeting this demand with our passion for flavor, innovative new products, in-store merchandising and creative meal ideas. Our outlook is for solid profit growth in 2012 driven by higher sales and further cost savings. We expect the weak economy and volatile material costs to persist, and we intend to continue adapting our pricing actions and marketing programs. We also plan to offset a portion of increased costs and fuel higher brand marketing support with our CCI cost savings and have set a goal to achieve at least $40 million in 2012,” Wilson concluded.