Emerging Markets Boost McCormick 3Q
SPARKS, Md. (AP) — Emerging markets are adding spice to McCormick & Co.'s business.
Increasing consumer demand in China, along with recent deals in India and Poland, helped the lifted spices, seasonings and condiments maker's third-quarter profit 13 percent, despite higher costs.
For the quarter ended Aug. 31, the company said Thursday that it earned $104.4 million, or 78 cents per share, up from $92 million, or 69 cents per share, in the same quarter last year. Analysts predicted profit of 76 cents per share, according to FactSet.
Revenue rose 6 percent to $977.7 million from $920.4 million. Half of that growth, when stripping out the effects of changing currency values, was due to overseas acquisitions. McCormick last year bought a Polish spice company that distributes in Russia as well as central Europe and Eastern Europe, and formed a joint venture with Kohinoor Foods Ltd. of India to sell basmati rice and other food there. Higher prices and stronger consumer sales in China also propelled growth, although sales to businesses in Asia declined.
Still, analysts expected still higher revenue of $989.1 million.
McCormick makes spices for consumers as well as restaurants and food manufacturers. Like many food companies, it has had to deal with rising costs for ingredients as global commodity prices climb. The company said it continued to face higher costs, but was trying to offset that with higher prices of its own and cost cuts in other areas. The company expects to save $50 million this year.
Expansion overseas has lifted McCormick's results, but the rising value of the dollar is also cutting into foreign revenue. A stronger dollar means revenue from overseas takes a hit when it's translated back into the U.S. currency. Excluding the effects of exchange rates, the company said its revenue rose 9 percent.
McCormick also lifted its profit outlook for the year Thursday because of a more favorable tax rate, to $3.03 to $3.08 per share from $3.01 to $3.06 per share. Analysts expect a profit of $3.05 per share.
Shares of McCormick, which is based in Sparks, Md., fell $1.71, or 2.7 percent, to $61.18 in morning trading.