McCormick & Co. Q2 Profit Slides 2% on Transaction Costs; Adjusted EPS Meets Estimates (MKC)

McCormick & Co. Q2 Profit Slides 2% on Transaction Costs; Adjusted EPS Meets Estimates (MKC)


Spices and seasonings manufacturer McCormick & Company, Incorporated (MKC) reported before the opening bell on Thursday that it saw a slight decrease in second quarter profits, as costs related to the completed transaction of Wuhan Asia Pacific Condiments offset sales growth. However, earnings and revenues were pretty much in-line with analysts’ estimates.

The Sparks, Maryland-based company said its second quarter profit fell to $78.6 million, or 59 cents per share, from $80.4 million, or 60 cents per share, in the same period a year ago.

Excluding a transaction cost that came in a 2 cents per share, McCormick’s second quarter adjusted earnings were 61 cents per share. This was in-line with analysts’ estimates, according to those polled by Thomson Reuters.

The company went on to say that its second quarter sales rose 2% to $1.0 billion from $984 million last year. On a local currency basis, sales rose 3% in the quarter. Analysts were expecting the company to see sales of $1.01 billion for the quarter.

According to McCormick, higher volumes and product mix in its consumer business drove much of the sales increase. The company noted that brand marketing support and product innovation helped boost sales. Also, industrial sales were down slightly, but that was anticipated.

Alan Wilson, CEO of the company, stated, “In the second quarter of 2013, we grew sales for our consumer business…We are getting good returns on our investments to grow this business and we plan to increase our investment in marketing support approximately $15 million in the second half of the year.”

Looking ahead to the third quarter, McCormick expects to earn 78 cents per share, comparable with last year’s third quarter earnings. Analysts expect the company to earn 82 cents per share in the third quarter.

For fiscal 2013, the company now expects full year earnings to be between $3.13 and $3.19 per share. Analysts expect the company to earn $3.20 per share for the year. Furthermore, the company expects sales to grow between 4% and 6%.

McCormick shares were inactive during pre-market trading on Thursday. The stock is up 13.38% year-to-date.

The Bottom Line
Shares of McCormick & Co. (MKC) have a dividend yield of 1.89% based on last night’s closing price of $72.03 and the company’s annualized dividend payout of $1.36 per share.

McCormick & Company, Incorporated (MKC) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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