McCormick & Co. Inc. (MKC: Quote) on Wednesday said acquisitions, pricing actions and increased volume boosted its second-quarter profit, but raw material costs hurt its margins. Quarterly earnings per share met analysts' consensus, while top line beat their view. The spices and seasonings maker also confirmed its fiscal year 2012 earnings and sales growth forecast.
Chairman, President and CEO Alan Wilson said, "In a difficult economic environment, McCormick is delivering financial results that demonstrate the strength of our brands and our customer relationships in markets around the world. Acquisitions, new products, marketing programs and expanded distribution are driving sales growth in each geographic region, with particular strength in emerging markets which accounted for 14 percent of second quarter sales."
Second-quarter net income grew to $80.4 million from prior year's $73.6 million. Quarterly earnings per share rose 9 percent to $0.60, coming in line with the consensus estimate of analysts polled by Thomson Reuters. Analysts' estimates typically exclude one-time items.
McCormick's net sales grew 11 percent to $984 million, beating analysts' estimate of $969.79 million. In local currency, net sales increased 13 percent.
In the quarter, consumer business sales benefited from acquisitions and pricing actions taken last year to offset the impact of higher material costs. Asia/Pacific region's sales climbed 66 percent mainly due to the acquisition of India-based Kohinoor.
Industrial business segment sales grew 8 percent mainly on higher pricing and volumes.
Meanwhile, gross profit margin declined to 39.5 percent from last year's 39.7 percent as the company continued to face volatile material costs across all of its businesses.
Looking ahead, for the third quarter, the company projects a further decline in income from unconsolidated operations, and expects growth rate in earnings per share to be greater in the fourth quarter than in the third quarter.
For fiscal year 2012, McCormick continues to expect earnings per share in a range of $3.01 - $3.06. Analysts project earnings per share of $3.05 for the full year.
Also, the company confirmed its full-year sales growth forecast of 9 - 11 percent in local currency, including an estimated 4 percent contribution from last year's acquisitions. It said unfavorable foreign currency exchange rates will have a 2 percent unfavorable impact.
McCormick shares closed Tuesday's regular trading at $57.42, up $0.10 or 0.17 percent.
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by RTT Staff Writer
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