McCormick & Company, Incorporated (NYSE: MKC), a global leader in flavor, today reported strong growth in the third quarter of fiscal year 2012. To reflect a more favorable tax rate, the company increased its expected full year earnings per share to a range of $3.03 to $3.08.
Grew third quarter net sales 9% in local currency and increased operating income 12% from the year-ago period.
Reported third quarter earnings per share of $0.78 compared to $0.69 in the third quarter of 2011. Increased guidance for 2012 earnings per share to a range of $3.03 to $3.08 to reflect a more favorable tax rate.
Generated cash flow from operations of $256 million through the first three quarters of fiscal year 2012. Cash flow is expected to exceed $400 million for the full year.
Alan D. Wilson, Chairman, President and CEO, commented, “Our third quarter financial results demonstrate the effectiveness of McCormick’s growth initiatives, even in a challenging economic environment. We reported a 9% increase in sales in local currency and strong profit growth with solid performance in both our consumer and industrial businesses. Acquisitions, new product innovation, brand marketing programs and expanded distribution are helping to drive sales growth in each geographic region. We had particular strength in emerging markets which accounted for 14% of third quarter sales. In mid-2013, we anticipate expanding our emerging market presence with the acquisition of Wuhan Asia-Pacific Condiments Co., Ltd., which will extend our geographic footprint and flavor portfolio in China.
“Across all of our businesses, we continue to face volatile material costs. However, we are effectively offsetting the impact of higher material costs with our pricing actions and cost savings from our Comprehensive Continuous Improvement (CCI) program. CCI is also helping to fund our growth and in 2012 we are on track to increase our brand marketing support by at least $15 million. Our employees have been doing outstanding work on CCI, and we now expect to exceed $50 million of cost savings in 2012. With these CCI costs savings, additional brand marketing support, product innovation and other sales growth initiatives, we have momentum as we head into the final quarter of 2012.”
McCormick’s third quarter sales rose 6%, and in local currency the increase was 9% when compared to the year-ago period. In local currency, acquisitions completed in 2011 added about half of this increase, while pricing actions taken in response to higher material costs also contributed to the increase. In addition, sales in the third quarter of 2011 were impacted favorably by customer purchases in advance of a price increase effective in the fourth quarter of 2011. In the third quarter of 2012, operating income rose 12% to $144 million from $128 million in the third quarter of 2011, with the favorable impact of higher sales and cost savings from CCI effectively offsetting increased material costs.