WASHINGTON (dpa-AFX) - Spices and seasonings maker McCormick & Co., Inc. (MKC) reported Wednesday a profit for the first quarter that declined from last year, despite sales growth, hurt by charges and shrinking margins amid higher costs.
However, both adjusted earnings per share and quarterly sales topped analysts' expectations. The company also reaffirmed its adjusted earnings and revenue growth guidance for the full-year 2015.
'Our first quarter results demonstrated progress with our sales growth strategies, and our profit result has us off to a strong start in 2015,' Chairman, President and CEO Alan Wilson said.
The Sparks, Maryland-based company reported net income of $70.5 million or $0.55 per share for the first quarter, lower than $82.5 million or $0.62 per share in the prior-year quarter.
Excluding $0.15 per share of special charges, adjusted net income for the latest quarter was $90.4 million or $0.70 per share. On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $0.64 per share for the first quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 1.7 percent to $1.01 billion from $993.40 million in the same quarter last year, and topped six Wall Street analysts' consensus estimate of $985.12 million.
Sales rose 5.6 percent in local currency with strong increases in both business segments.
McCormick's consumer business sales edged up 0.8 percent to $620.3 million, and industrial business sales grew 3.2 percent to $390.1 million from last year.
In constant currency, consumer business sales rose 4.9 percent and Industrial business sales grew 6.8 percent.
Gross profit for the quarter was $389.7 million, down from $391.5 million in the year-ago quarter, and gross margin percentage also contracted 80 basis points to 38.6 percent from last year's 39.4 percent.
Looking ahead to fiscal 2015, McCormick continues to expect adjusted earnings in a range of $3.44 to $3.51 per share on projected 4 to 6 percent sales growth in constant currency. Street is currently looking for full-year 2015 earnings of $3.53 per share on annual sales growth of 0.4 percent to $4.26 billion.
The company also said it continues to expect cost reductions of at least $85 million, which are expected to help offset higher material costs, along with pricing actions.
McCormick's Comprehensive Continuous Improvement program or CCI, is expected to deliver at least $65 million, and savings from the announced streamlining and reorganization actions are estimated to be $20 million in 2015.
'Although we grew sales in the first quarter, operating income was unfavorably impacted by several factors including special charges, unfavorable currency rates and higher material costs. We anticipate that these headwinds will continue in 2015, but expect the benefit of our pricing actions and cost reduction efforts to build in the upcoming quarters,' Wilson added.
MKC closed Tuesday's regular trading session at $73.20, up $0.23 on a volume of 1.10 million shares. In the past 52-week period, the stock has been trading in a range of $64.92 to $77.08.
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