WASHINGTON (dpa-AFX) - Spices and seasonings maker McCormick & Co. Inc. (MKC) reported that its first-quarter net income increased to $82.5 million or $0.62 per share, from $76.0 million or $0.57 per share in the same quarter last year. Analysts polled by Thomson Reuters expected the company to report earnings of $0.58 per share for the quarter. Analysts' estimates typically exclude special items.
Cost savings from the company's Comprehensive Continuous Improvement or CCI program, as well as a favorable mix of business, improved gross profit margin, which rose to 39.4% from 38.7% in the year-ago period. The company increased operating income 11% to $125 million in the first quarter of 2014. Higher sales and improved gross profit margin more than offset a $7 million increase in brand marketing this period.
Net sales for the quarter rose to $993.4 million from $934.4 million in the prior year quarter. Nine analysts had consensus revenue estimate of $973.20 million for the quarter.
The company's first quarter sales rose 6% from the year-ago period and in local currency the increase was 8%. The acquisition of WAPC, completed in May 2013, contributed 4% to this growth rate. Pricing actions and higher volume and product mix, largely accounted for the other half of this sales increase.
In the second quarter of 2014, the company expects earnings per share to increase only slightly from the year-ago period as a result of several factors, including higher brand marketing support and weakness in demand from quick service restaurants in the U.S.
The company reaffirmed its financial outlook for 2014. The company anticipates growing sales 3% to 5% in local currency, which includes an incremental impact of the WAPC acquisition in the first half of the year. In addition, the company expects unfavorable foreign currency exchange rates to reduce sales by 1% in 2014, based on prevailing rates.
The company reaffirmed projected 2014 earnings per share of $3.22 to $3.29. In this projection, higher sales, a favorable mix of business and CCI cost savings are expected to more than offset a significantly higher tax rate and an estimated $0.01 per share of special charges.
Street currently is looking for fiscal year 2014 earnings of $3.26 per share on annual revenues of $4.29 billion.
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