US-based spices and seasonings manufacturer McCormick has reported that its net income increased by 2% to $76m for the first quarter of 2013, compared to $74.5m in the same quarter in 2012.
The net income for the quarter was driven by strong results in the company's consumer business unit, but was weighed down by weakness in the industrial segment and tough margins.
For the quarter ended 28 February 2013, the company reported 3% increase in net sales to $934.4m, compared to $906.7m for the corresponding period in the fiscal 2012, due to pricing actions taken in response to higher material costs. The growth was also driven by 7% growth in consumer business sales on strong volume and product mix.
McCormick stated that the volume and product mix for the consumer business increased 5%, driven primarily by product innovation and brand marketing support, with increase in sales in each of the three geographic regions: the Americas, Europe, Middle East and Africa (EMEA) and Asia/Pacific by 7%, 4% and 13% respectively. For the industrial business, volume and product mix declined 5%, mainly due to weaker demand from quick service restaurants and a strong growth rate in the first quarter of the previous year.
McCormick chairman, president and CEO Alan Wilson said, "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."
In the first quarter, cash flow from operations totalled $32m, compared to $23m in the corresponding period in 2012.
For the second quarter of 2013, the company plans to increase brand marketing support by approximately $5m, and expects the continuation of higher material costs and an unfavourable impact of approximately $5m from increased retirement benefit expense.
McCormick plans to update its 2013 fiscal year outlook following the completion of the previously announced agreement to acquire Wuhan Asia Pacific Condiments, which is expected to occur in mid-2013.
