Restructuring and price hikes yield results for McCormick

By staff reporter

- Last updated on GMT

Related tags: Brand, Foreign exchange market, Mccormick

McCormick & Company has reported a strong set of results for
its first quarter, thanks to higher pricing, greater volume sales,
and foreign exchange rates in its favor.

The flavor and spice company, based in Sparks, Md, today posted net sales for the three months ended February 29 of $724.0m, compared to $652.6m for the prior year period and earnings per share up from $0.33 to $0.39. It said that all sections and regions of the business grew. Its industrial division saw a 12.8 percent sales increase to $313.5m. As with most ingredient suppliers in the current climate of high commodity costs, McCormick said its margins are under pressure. However it has sought to keep them plumped by introducing price increases early in the year - a move it expects will keep yielding benefits throughout the rest of the financial year. In the industrial segment, amongst the commodity raw materials that are causing particular concern - and which have forced up prices - are soy oil, flour and cheese. McCormick has been working with its strategic customers to contract for future purchases. In addition to price increases the company, which is in the midst of a restructuring program, is making cost savings and seeking deals through the supply chain. In its full year 2007 statement McCormick said it had already realized $45m in annual savings since the restructuring started. The program is expected to end this year, with $55m savings overall - way ahead of its original $55m goal. Last month McCormick announced the acquisition of Canadian honey brand, Billy Bee Honey for $75m, as part of its ongoing quest to extend its flavor profile. In addition to having a 60 per cent share of branded honey sales in the Canadian retail sector, Billy Bee also supplies an estimated 50 per cent of the private label honey sold to Canadian retailers and about half of the honey used as an ingredient by food manufacturers in Canada. But Joyce Brooks, assistant treasurer at McCormick, told at the time that the company did not see Billy Bee primarily as a source of ingredients. "We have a track record of buying strong brands that allow us to extend our flavor profile,"​ she said. "Billy Bee is a strong brand in Canada, and a nice complement to the savory flavor business we have there."​ President and CEO Alan Wilson said today that the combination of Billy Bee sales, the good Q1 results, and the positive outlook for the coming quarters was behind an increase it its sales growth outlook for the full year - from 4 to 6 percent to 5 to 7 percent.

Related topics: Flavours and colours

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