WASHINGTON (dpa-AFX) - Spices and seasonings maker McCormick & Co. Inc. (MKC) Thursday said third-quarter profit increased from the prior year, supported by higher revenues and a lower tax rate. Adjusted earnings and revenues were ahead of Wall Street expectations. Further, the firm lifted its full year earnings forecast, citing a lower tax rate projection.
Net income for the quarter increased to $122.9 million from $104.4 million in the previous year. Earnings per share were $0.94, compared to $0.78 last year.
Adjusted earnings per share totaled $0.95 in the just concluded quarter. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.81 per share for the quarter. Analysts' estimates typically exclude special items.
Operating income improved to $157.3 million from $148.4 million, and gross profit margin advanced to 40.3 percent from 40.1 percent.
Net sales grew to $1.043 billion from $1.016 billion in the prior year. Analysts expected revenues of $1.03 billion.
In the Consumer Business, net sales rose 2 percent to $621.9 million. In local currency, the growth was 1 percent, comprised of higher pricing offset by a decline in volume and product mix.
According to the company, the consumer business results were led by a 15 percent sales increase in China and solid growth in Europe, Middle East and Africa region.
Industrial business sales rose 4 percent to $420.9 million, amid higher volume and product mix from innovation and distribution gains, as well as pricing actions. The increase was driven by growth in snack seasonings in the Americas and higher margin industrial products in EMEA.
Income taxes for the quarter declined to $31.1 million from $35.3 million, reflecting the company's current business mix across tax jurisdictions, final regulations clarifying the impact of a tax law change in France and other discrete tax items.
Looking ahead, Alan Wilson, chairman, president and CEO, said, 'While we continue to project 3% to 5% sales growth in local currency, the pace of growth is more rapid in international markets. This change in business mix has led us to moderate our outlook for operating income in 2014, but is also driving a lower tax rate. We now anticipate higher earnings per share this year, with the net impact of these factors and additional favorable tax variances.'
The company increased its 2014 guidance for adjusted earnings per share to a range of $3.30 to $3.37, primarily due to a lower tax rate projection of 27 percent for the current fiscal year. Analysts project annual earnings of $3.28 per share.
While announcing the second-quarter results in late June, the firm had confirmed its plans to increase sales by 3 to 5 percent in local currency and report earnings per share of $3.22 to $3.29.
The stock closed down 1.9 percent on Wednesday at $65.61.
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