US-based spice maker McCormick has delivered better than expected third quarter results, boosted by strong sales. The company raised its full year guidance in anticipation of the seasonally busy fourth quarter.
McCormick posted earnings of US$43.1m, or 32 cents a share, down from $48m or 35 cents a share reported for the comparable period of last year. However, excluding the effect of a one-off charge, the company would have reported earnings of 42 cents a share.
Revenue rose by 6% to $663.1m, compared with $622.7m a year ago.
Robert J. Lawless, chairman, president & CEO, said: “This was the third quarter of excellent results with strong contributions from the consumer and industrial businesses. We are having success with new product launches, ethnic products, grinders and convenience items. Our acquisition of Simply Asia Foods is off to a great start and after 60 days is contributing positively to sales and profits. The pricing actions taken early in 2006 are offsetting the higher costs of energy, benefits and certain raw materials. Many of our employees around the world are focused on initiatives to reduce costs as demonstrated in higher profit margins.”
The company raised its earnings guidance for fiscal 2006 by 4 cents a share to between $1.45 and $1.48 a share, up from $1.41 to $1.44 per share. Excluding a restructuring charge of 22 cents and stock-related compensation expense of 11 cents, the annual growth rate should be in the range of 11-12%, Lawless said.
Sales at McCormick were boosted by increased demand for ethnic products, including Hispanic foods and the recently acquired Simply Asia and Thai Kitchen brands. New pricing and the discontinuation of less profitable product lines also boosted margins, the company said.
To drive growth in the traditionally busy fourth quarter, where about 40% of revenues are generated, the company said it would increase its marketing spend.
Lawless also said the company’s three-year restructuring plan, which aims to shed up to 1,000 jobs by 2008, is on track.