US spice giant McCormick & Co. is in line to post a “record” year in terms of profits for its current financial year, the company’s finance chief has said.
Speaking to analysts after McCormick posted its third-quarter results and lifted its earnings target for the full year, CFO Gordon Stetz said the company’s marketing plans and product innovation left the business “poised for a solid sales performance” in the fourth quarter of the year.
Stetz said “increased brand support, higher input costs and an unfavourable currency exchange rate” would effect McCormick’s earnings per share growth in the fourth quarter but he said the company felt it could at least match its profit level in last year’s fourth quarter.
“We expect to be at or above the excellent profit performance achieved in the fourth quarter of 2009,” Stetz said. He added: “We are on track for 2010 to be a record year for McCormick.”
The company’s organic sales growth in the nine months to the end of August has been below its target of 2-4% but chairman, president and CEO Alan Wilson said the business was maintaining its forecast for the full year.
“We’re holding that guidance. Obviously our fourth quarter is our biggest and most important quarter of the year. We feel very positive about our plans for the fourth quarter. Obviously we’ve got to execute those. But we’re bullish on our fourth quarter,” Wilson said.
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The McCormick chief said the company would use “similar levels” of coupons and price promotions during its fourth quarter, which coincides with Christmas, as the business used last year.
Looking to the start of 2011, McCormick indicated that it would roll out new consumer products in the US, including an ethnic-foods line called World Flavors.
Stetz said US retailers were keen to see more new products introduced in a bid to restore sales growth in-store. For some months, the US retail environment has been characterised by broad deflation.
The McCormick finance chief said the company was “seeing a lot more energy in product innovation and acceptance by retailers to get back to growth than necessarily where we were”.
Stetz said: “I’m comparing it to where it was a year ago, where there wasn’t as much receptivity of new products. And now I’m seeing actually as much a pull from retailers for new products, at least in the categories where we’re servicing.”
McCormick is also looking to introduce more new products in the UK and France, its two biggest markets within its Europe, Middle East and Africa division. The company’s consumer sales fell 10% in the region during the third quarter but innovation had boosted sales in the UK and France.
“Our innovations in marketing have emphasized differentiated products like Perfect Shake seasoning blends, Flavorful recipe mixes and Ducros grinders. Perfect Shake is modeled on the success of our Perfect Pinch line in US and has delivered double digit sales growth of seasoning blends in the UK,” Wilson said.
“Incremental marketing in the fourth quarter will be behind these types of products as well as our Vahine line of homemade desserts. Ready for launch as we had into 2011, our Schwartz recipe mixes for vegetables and a full range of Slow Cookers.
In France we are introducing four new Ducros grinders, seven additional Ducros herbs and spices, and three varieties of Pattiserie Vahine dessert mixes.”