Product innovation in spices, seasonings and recipe mixes boosted consumer business sales and led to an overall gain in earnings and sales at McCormick & Co., Inc. in the first quarter. Net income in the quarter ended Feb. 28 was $76 million, equal to 57c per share on the common stock, up 2% from $74.5 million, or 56c per share, in the same quarter a year ago.
Sales for the quarter were $934.4 million, up 3% from $906.7 million a year ago.
“Our financial results for the first quarter included strong growth in our consumer business, earnings per share slightly ahead of our initial outlook and a great start to cash flow for 2013,” said Alan D. Wilson, chairman, president and chief executive officer. “We were pleased to achieve these results in a challenging environment, and I thank employees throughout McCormick who are delivering high performance and contributing to our success.”
Specifically, Mr. Wilson pointed to growth in the Consumer Business unit, where sales increased 7% behind innovation in spices and seasonings, recipe mixes and “regional leaders” such as Zatarain’s in the United States and Vahine in France.
Operating income in the Consumer Business unit totaled $87.7 million in the first quarter, up 8% from $81.4 million in the same period a year ago. Net sales rose to $569.8 million from $534.2 million.
“Consumer sales in the Americas rose 7%, with minimal impact from foreign currency exchange,” McCormick said. “This increase was mainly driven by volume and product mix, with pricing actions adding 1%. Initiatives driving this unit growth included consumer marketing, promotional activity and in-store merchandising for spices, herbs and seasonings in both the U.S. and Canada. In addition, product innovation led to an increase in sales of recipe mixes, as well as Grill Mates, Zatarain’s and Simply Asia brand products.”
Even as the Consumer Business unit flourished, McCormick said its Industrial Business struggled during the quarter. Operating income for the division was $24.3 million on sales of $364.6 million, which compared with $31.1 million and $362.5 million, respectively, in the year-ago period.
“As expected, our industrial business had a slower start to the year,” Mr. Wilson said. “Compared to a 13% rate of sales growth in the first quarter of 2012, industrial business sales declined 2% in the first quarter of 2013. Demand has been weak in certain markets, including quick-service restaurants in the U.S. and China, although we expect some recovery in the upcoming quarters.”
Mr. Wilson reaffirmed McCormick’s outlook for 3% to 5% sales growth in local currency and 2013 earnings per share of $3.15 to $3.23.
