McCormick reports record results

26 Jan 2017

McCormick has reported financial performance for the fourth quarter that led to record results for the fiscal year ended November 30, 2016. Sales rose 2% in the fourth quarter from the year-ago period.

McCormick reports record results

McCormick has reported financial performance for the fourth quarter that led to record results for the fiscal year ended November 30, 2016.

Sales rose 2% in the fourth quarter from the year-ago period. In constant currency, the company grew sales 4%, with increases in both the consumer and industrial segments. Earnings per share increased to $1.24 from $1.16 in the fourth quarter of 2015, mainly due to a higher operating income. Adjusted earnings per share rose 8% to $1.27 from $1.18 in the year-ago period.

For fiscal year 2016, sales rose 3% from the year-ago period and in constant currency, the company grew sales nearly 6%. Earnings per share increased to $3.69 from $3.11 in fiscal year 2015, and adjusted earnings per share rose to $3.78 from $3.48. Cash flow from operations grew 12% to a record $658 million in 2016 and the company returned $461 million of cash to its shareholders through dividends and share repurchases.

For fiscal year 2017, McCormick expects to increase sales year-on-year by 3% to 5%, which is a constant currency projected growth rate of 5% to 7%. The company expects to achieve earnings per share of $4.02 to $4.10 in fiscal year 2017, compared to $3.69 in 2016. Adjusted earnings per share are expected to be $4.05 to $4.13, which is an increase of 7% to 9% from $3.78 in 2016 and includes an estimated 2 percentage point unfavorable currency impact.

"We achieved record financial results in 2016, driven by strong growth, great performance and the engagement and efforts of McCormick employees around the world,” said Lawrence E. Kurzius, President and CEO. “Our business and strategies are aligned with today's consumer and their increased interest in bolder flavors, demand for convenience, and focus on wellness and fresh ingredients.”

"Our 2016 results met each of our key financial targets. Our brand marketing, product innovation, expanded distribution and a steady stream of value-enhancing acquisitions each contributed to higher sales. We also worked to reshape our portfolio in the areas of gluten-free, non-GMO labeling and more organic items. Through our Comprehensive Continuous Improvement (CCI) program, we are generating fuel for this growth, funding increases in leading-edge digital marketing, break-through innovation and value-enhancing acquisitions. Led by this program, we exceeded $100 million in cost savings in 2016 and are on track to reach our four-year $400 million goal of cost savings by 2019. We also had a fifth consecutive year of record cash flow from operations, and in 2016, returned more than two-thirds of this cash to McCormick shareholders. A portion of our cash was used to complete our acquisition of Gourmet Garden, a fast-growing leader in chilled herbs, and toward the end of the fiscal year, we signed an agreement to purchase Giotti, a leading European flavor business. Along with these other accomplishments, we are making measurable progress toward our 2019 sustainability goals. During 2016, we celebrated the 75th anniversary of our Charity Day, were recognized for our diversity and inclusion initiatives, and Corporate Knights recently ranked McCormick No. 14 in their 2017 Global 100 Most Sustainable Corporations Index and No. 1 among consumer staples companies.”

"We are proud of our performance in 2016 and believe we have good momentum heading into 2017. Taste continues to be the leading factor in deciding what consumers choose to eat. Globally, retail sales of packaged spices and seasonings, our largest category, have reached $11 billion and are projected to grow at a 5% compound annual growth rate for the next five years. In 2017, we expect to 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 2017 cost savings led by our CCI program. With higher sales and greater productivity, we expect to increase earnings per share in line with our long-term constant currency objective of 9% to 11%. Along with higher profit, we are working toward another year of strong cash flow.”

"We are well-positioned to deliver strong financial results and shareholder return. Our steadfast focus on growth, performance and people will continue to drive our strategy and success at McCormick."