McCormick reports record financial results

29 Jan 2018

McCormick has reported what it says are record financial results and a strong growth outlook for 2018. Fourth quarter, sales rose 21% from the year-ago period, with strong results in both the consumer and industrial segments.

McCormick reports record financial results

McCormick has reported what it says are record financial results and a strong growth outlook for 2018.

In the fourth quarter, sales rose 21% from the year-ago period, with strong results in both the consumer and industrial segments. Earnings per share increased to $1.32 from $1.24 in the fourth quarter of 2016. Adjusted earnings per share rose 21% to$1.54 from $1.27 in the year-ago period.

For fiscal 2017, sales rose 10% from the prior year with minimal impact from currency. Operating income was $702 million compared to $641 million in fiscal 2016. Adjusted operating income was $786 million, a 20% increase from $657 million for fiscal 2016, and a 21% increase in constant currency. Earnings per share increased to $3.72 from $3.69 in fiscal year 2016, and adjusted earnings per share rose 13% to $4.26 from $3.78.

For the 2018 fiscal year, McCormick expects to increase sales year-on-year by 12% to 14%, which includes a one percentage point favourable currency impact. The company expects to achieve earnings per share of $6.89 to $7.14 in fiscal year 2018, including the non-recurring net favorable impact of the recent U.S. tax legislation, compared to $3.72 in 2017. Adjusted earnings per share is expected to be$4.80 to $4.90, which is an increase of 13% to 15% from $4.26 in 2017 and includes an estimated one percentage point favourable currency impact.

Lawrence E. Kurzius, Chairman, President and CEO, said: "Our broad global flavor portfolio continues to drive growth and differentiate McCormick. In 2017, we delivered another year of record financial results with strong core business performance and the incremental impact of acquisitions. Our performance reflects the effectiveness of our strategies and engagement of employees around the world.”

"We delivered growth in sales, operating income, and earnings per share in 2017. We exceeded each of our key financial targets in 2017. Our sales growth and focus on profit realization drove excellent financial results across both our consumer and industrial segments. In addition to our strong base business and new product growth, the acquisitions of RB Foods, Giotti and Gourmet Garden contributed to higher sales as valuable additions to our global portfolio of flavors. Through our Comprehensive Continuous Improvement (CCI) program, we are generating fuel for growth. Led by this program, we achieved $117 million in cost savings in 2017 and are well on our way to achieving our four-year $400 million goal of cost savings by 2019. Through the combination of our CCI program and our strategy to shift our portfolio to more value-added products, we expanded our adjusted operating margin. We also had a sixth consecutive year of record cash flow from operations, and in 2017, increased our quarterly dividend for the 32nd consecutive year. Along with these accomplishments, we are making measurable progress toward our 2025 sustainability goals. During 2017, we were recognized as a DiversityInc Top 50 Company, and Corporate Knights recently ranked McCormick in their 2018 Global 100 Most Sustainable Corporations Index as No. 1 in the food products industry for the second consecutive year.”

"2017 was a milestone year for McCormick. We are proud of our performance and our continued growth trajectory heading into 2018. With new ideas, innovation and purpose, we are proactively adapting to changes in the industry. We are continuing to capitalize on the global and growing consumer interest in healthy, flavorful eating, the source and quality of ingredients, and sustainable and socially responsible practices. Our performance across our broad global portfolio is strong and we strengthened our flavor leadership further with the addition of the iconic French's and Frank's RedHot brands. Our enthusiasm for the acquisition of these brands and our confidence that it will drive significant shareholder value only strengthened in the fourth quarter. We are well positioned to capitalize on the opportunities for growth and cost savings. Our focus on growth by executing against our strategies, driving profit realization and strengthening our organization is the foundation of our future. In 2018, we expect to again exceed our 4% to 6% long-term constant currency objective for sales growth. We are balancing our resources and efforts to drive sales with our work to lower costs, and plan to achieve approximately $100 million in 2018 cost savings led by our CCI program. With higher sales and greater productivity, we expect to increase adjusted earnings per share 13% to 15%. Along with higher profit, we are working toward another year of strong cash flow.”

"I want to recognize McCormick employees around the world for their efforts and engagement. With our vision to bring the joy of flavor to life and our steadfast focus on growth, performance, and people, we are confident in our continuing momentum for growth in 2018 to deliver strong financial results and build value for our shareholders."

In the final quarter, industrial segment sales rose from $411.4m to $512.6m. For the full year, sales were $1,864.0m, up from $1,658.3m. Operating income was also up substantially for both periods.

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