Spice company McCormick & Co has reported higher sales for the second quarter ended 13 May 2005, but the high cost of vanilla beans and accounting adjustments in its UK operation helped keep profit unchanged.
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Sales in the second quarter were $629m, compared with $596m in the same period last year. Net income in the quarter was $42.8m, almost unchanged from the year earlier period.
Sales in the half were $1.232bn, compared with $1.169bn, in the same period a year earlier, while net income was $79.8m, compared with $81m.
Higher cost vanilla beans continued to have an impact on gross profit margin in the second quarter. Gross profit margin was also affected by additional operational accounting adjustments related to the condiment operation in the UK.
Earnings per share this period were impacted by higher income from the Company’s joint venture in Mexico and lower shares outstanding. These positive factors were offset by higher interest rates and a higher tax rate.
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By GlobalData“In the second quarter, we achieved higher sales, a positive product mix and cost reductions that more than offset the adverse effect of high cost vanilla beans and operational accounting adjustments,” said Robert J. Lawless, chairman, president and CEO. “As we look to the second half of our fiscal year, we expect strong sales growth, robust margin improvement and a 16%-20% increase in earnings per share.”
“For the second half, we are projecting significantly improved financial performance,” he said. “We expect to grow sales about 4% based on our new product activity, marketing programs and the addition of Silvo.”
