McCormick Reports Increase in First Quarter Sales and Profits
SPARKS, Md., March 19 /PRNewswire/ -- McCormick & Company, Incorporated (NYSE: MKC), today reported a 15% increase in sales and 9% increase in net income and earnings per share for the first quarter of fiscal 2001.
Earnings per share for the quarter ended February 28 increased 9% to 38 cents from 35 cents in 2000. The Ducros business diluted earnings per share for the quarter by 4 cents per share, slightly better than expected. Excluding dilution from the Ducros acquisition, earnings per share for 2001 were 42 cents, an increase of 7 cents versus the prior year. On a per share basis, this was achieved through 5 cents of higher operating profit, 1 cent in reduced net interest expense and 1 cent from a lower effective tax rate.
Sales for the quarter were $534 million, up 15% over the first quarter of 2000. Excluding foreign exchange and the Ducros business, sales increased 2.4%. Gross profit margin for the quarter was 39.1%, 3.7 percentage points over last year. This increase resulted from a shift in product mix to higher margin, more value-added products, including the recently acquired Ducros business, as well as cost reduction initiatives. Operating profit margin for this year's quarter reached 8.4% versus 7.8% in 2000.
Consumer Business
Sales for McCormick's consumer business rose 33% over last year's first quarter and increased 1% excluding the impact of Ducros and foreign exchange. In local currency, consumer sales were down 1% in the Americas, up 3% in Europe (excluding Ducros) and up 4% in Asia. This quarter, consumer sales in the Americas were lower than anticipated. Following our fourth quarter sales, the first quarter reloading of stores by our customers was below the level experienced in previous first quarters. Operating income for the quarter increased 10% to $27.2 million. As a percent of net sales, operating income decreased to 10.1% from 12.1% including the dilutive effect of Ducros.
Industrial Business
Industrial sales increased 1% versus last year's quarter and 3% excluding foreign exchange. In local currency, industrial sales increased 1% in the Americas, 8% in Europe and 11% in Asia. The strongest increases were achieved in sales of snack seasonings and sales to food service customers. Operating income for the quarter increased 31% to $19.5 million versus last year. As a percent of net sales, operating income increased to 8.9%, which compares to 6.8% in 2000.
Packaging Business
The packaging business reported third party sales up 7% for the quarter over last year, with the increase again in our tube business. Operating profit (including intersegment business) was $5.2 million, a decrease of 1%. As a percent of net sales, operating profit decreased to 9.6% from 10.4% mainly as a result of higher resin costs.
Chairman's Comments
Commented Robert J. Lawless, Chairman, President & CEO, "Our first quarter has provided a strong start to fiscal 2001. Sales exceeded our 12-14% target range with Ducros results above expectation and an improved industrial performance. While sales in our Americas consumer business were impacted by customer inventory adjustments, we continue to be encouraged by the fact that growth of our branded products is outpacing that of the product categories in which we compete. We are well on our way to reaching our goal of a 40% gross profit margin. Our 9% earnings per share increase in the first quarter was better than expected and positions us well to meet our growth target of 8-10% for the year.
"Our strategies for growth are delivering positive results in a number of areas. Integration of the Ducros acquisition is proceeding well, and this business has outperformed our expectations. The Beyond 2000 program is in full swing, on plan and already contributing to gross profit margin improvements.
"McCormick is committed to delivering superior financial results and building shareholder value. The momentum gained over the last few years is building, and all signs are positive for another excellent year for the Company and our shareholders."
Forward-Looking Statement
Certain information contained in this release, including expected trends in net sales and earnings performance, are "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could be materially affected by external factors such as: actions of competitors, customer relationships, fluctuations in the cost and availability of supply chain resources and foreign economic conditions, including currency rate fluctuations.
About McCormick
McCormick & Company, Incorporated is the global leader in the manufacture, marketing and distribution of spices, seasonings and flavors to the entire food industry - to foodservice and food processing businesses as well as to retail outlets. In addition, the packaging group manufactures and markets specialty plastic bottles and tubes for personal care and other industries.
First Quarter Report McCormick & Company, Incorporated
Consolidated Income Statement (Unaudited)
(In thousands except per-share data)
Three Months Ended
2/28/01 2/29/00
NET SALES
Consumer $269,537 $203,092
Industrial 218,941 217,301
Packaging 45,026 42,010
Total Net sales 533,504 462,403
Cost of goods sold 325,009 298,571
Gross profit 208,495 163,832
Gross profit margin 39.1% 35.4%
Selling, general &
administrative expense 163,556 127,243
Special charges 0 502
Operating income 44,939 36,087
Interest expense 14,287 7,406
Other (income)/expense (973) 140
Income before income taxes 31,625 28,541
Income taxes 10,468 10,189
Net income from consolidated
operations 21,157 18,352
Income from unconsolidated
operations 5,429 6,065
NET INCOME $26,586 $24,417
EARNINGS PER SHARE - ASSUMING
DILUTION $0.38 $0.35
EARNINGS PER SHARE - BASIC $0.39 $0.35
Average shares outstanding -
assuming dilution 69,260 69,818
Average shares outstanding - basic 68,505 69,537
| Note: | The Company has reclassified amortization of goodwill from other |
|---|---|
| income to selling, general & administrative expense. All amounts have been | |
| reclassified to conform to the current year presentation. Goodwill | |
| amortization was $3,280 and $1,255 for the first quarter of 2001 and 2000, | |
| respectively. |
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)
2/28/01 2/29/00
Assets
Receivables $264,117 $180,622
Inventories 284,956 247,316
Prepaid allowances 116,260 123,524
Property, plant and equipment, net 381,766 362,356
Other assets 642,027 286,477
Total assets $1,689,126 $1,200,295
Liabilities and shareholders' equity
Short-term borrowings $331,857 $188,172
Other current liabilities 398,910 321,881
Long-term debt 458,098 239,871
Other liabilities 115,807 96,992
Shareholders' equity 384,454 353,379
Total liabilities and
shareholders' equity $1,689,126 $1,200,295
SOURCE McCormick & Company, Incorporated
CONTACT: McCormick & Company Corporate Communications, 410-771-7310/