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McCormick's Q4 Profits Up; 2012 Sales Reach a Record $4 Billion
Posted: January 28, 2013
McCormick & Co.'s fourth-quarter profits rose nearly 13% and revenue for the full year rose to $4 billion for the first time, although the company warned of expected weak demand from industrial customers in Asia-Pacific into the next quarter.
"While the Asia-Pacific region had a strong sales result for the consumer business, demand from industrial customers, primarily quick service restaurants, was weak," Alan Wilson, McCormick's president and CEO told investors during an earnings conference call. "This was largely an outcome of less new product and promotional activity versus the year-ago period. We expect this decline to extend into the first quarter of 2013, which has a tough year-ago comparison," he added.
Still, Wilson said he was extremely pleased with fourth-quarter results in Europe, the Middle East and Africa, EMEA, with strong top line growth of 10% in local currency, including a 6% increase in volume and product mix.
Including the impact of the company's 2011 acquisitions, sales in merging markets grew 47% to reach 14% of 2012 sales. This is up from 10% of sales in 2011 and has moved the company towards its goal of 20% of sales by 2015.
Looking ahead to 2013, with material cost inflation estimated at approximately 3% and no major pricing actions currently planned, the company expects retail buying patterns for its products to normalize and for consumers to face less pressure from higher pricing.
For the fiscal fourth quarter ended Nov. 30, the company said its net income rose to $148.5 million from $131.7 million a year earlier. Revenue jumped to $1.15 billion from $1.11 billion a year ago.
For the full-year 2012, net income rose to $407.8 million from $374.2 million as revenue climbed to $4 billion from $3.7 billion a year earlier, which is double the amount of sales the company posted a decade ago. For 2013, McCormick sees earnings $3.15 to $3.23 a share.
Aside from earnings results, Wilson told investors about the company's 2012 U.S. study, which revealed that while today's consumer is under pressure and striving to save both time and money, "the one thing they refuse to give up is flavor," Wilson said.
Revealing the study's metrics, Wilson noted that more than half of consumers point to flavor and seasonings as a great way to add variety to everyday dishes.
"Euromonitor projects that globally, herbs and spices will be one of the strongest of all flavor-related grocery categories through 2016," Wilson added. "We believe these latest flavor trends, together with our effective growth initiatives and sustainable business strategy, will drive strong underlying financial performance in 2013 even in a still challenging global economic environment."