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McCormick Updates Financial Outlook; Projects FY18 Sales To Rise 13-15%

McCormick & Company, Incorporated (MKC) announced, for 2018, the company now projects adjusted earnings per share to be in the range of $4.85 to $4.95. This is an increase from the previous guidance of $4.80 to $4.90 and reflects a reduction of the expected adjusted effective tax rate to approximately 23% for fiscal 2018. The updated guidance projects 14% to 16% growth from adjusted earnings per share of $4.26 in 2017 and includes an estimated one percentage point favorable impact from currency.

In 2018, the company expects to grow sales 13% to 15% compared to 2017, including two percentage points favorable impact from currency rates. This is an increase from previous guidance of 12% to 14% which included only a one percentage point favorable impact from currency rates. The company has plans to achieve at least $100 million of cost savings and intends to use these savings to improve margins, fund an increase in brand marketing, and as a further offset to increased material costs.

For fiscal 2018, the company projects another year of strong cash flow, with plans to return a significant portion to shareholders through dividends and to pay down debt.

For first-quarter, adjusted earnings per share was $1.00 compared to $0.76 in the year-ago period. The company said the increase was driven primarily by higher adjusted operating income and a lower adjusted income tax rate as a result of the U.S. Tax Act and favorable discrete items, including the exercise of stock options during the quarter, which were partially offset by higher interest expense and shares outstanding. The increase also includes the favorable impact of foreign currency rates.

McCormick reported a 19% sales increase in the first quarter from the year-ago period, including a 4% favorable impact from currency. In constant currency, the company grew sales 15%.

Lawrence E. Kurzius, Chairman, President and CEO, stated: "Both our consumer and flavor solutions segments contributed to our constant currency sales growth of 15%. Our consumer segment grew across each region led by incremental sales from the acquisition of RB Foods in addition to strong growth in our Asia/Pacific region, led by China. Similarly, our flavor solutions business grew across each region through incremental sales from acquisitions, increased sales of our flavors and branded foodservice in the Americas region as well as greater demand from quick service restaurants in the Europe, Middle East and Africa (EMEA) and Asia/Pacific regions. Across both of our segments, we are pleased with the Frank's RedHot and French's performance which is in line with our plans."

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