HUNT VALLEY, MD. — A strong fiscal 2019 third quarter prompted flavor and condiment maker McCormick & Co. to raise its earnings guidance for the year. The positive performance was driven by 3% sales growth in the company’s Consumer business unit, which totaled $794.2 million during the quarter.
The Flavor Solutions business unit saw its sales fall 2% to $535 million during the third quarter following sales growth of 5% during the first half of the year. Management said the weakness was related to the timing of some customer-related activity.
For the quarter ended Aug. 31, McCormick & Co. net income totaled $191.9 million, equal to $1.45 per share on the common stock, up from $173.5 million, or $1.32, in the same period a year ago.
Sales for the quarter were $1,329.2 million, an increase over the previous year when quarterly sales were $1,318.2 million.
“Our strong third-quarter performance is a continuation of the results we achieved in the first half of 2019,” said Lawrence E. Kurzius, chairman, president and chief executive officer, during a conference call with financial analysts on Oct. 1. “Year-to-date through the third quarter, we’ve grown our sales 1%, which is 3% in constant currency; and adjusted operating income, 6% or 8% in constant currency. We continue to expect another year of strong performance in 2019.”
As a result of the strong quarter, McCormick & Co. raised its full-year earnings guidance to $5.30 to $5.35 per share from $5.20 to $5.30.
“This updated guidance reflects a 7% to 8% growth rate and, importantly, includes continued investments to drive growth,” Mr. Kurzius said.
In the Americas region, the company grew constant currency sales 4%. The growth was entirely organic and attributable to higher volume and product mix driven by both the company’s base business and new products, Mr. Kurzius said.
In August 2018, McCormick & Co. completed its $4.2 billion acquisition of Reckitt Benckiser’s food business, which included such brands as Frank’s, French’s and Cattlemen’s. Since then the company has been integrating the business and deleveraging. The company’s strong performance during 2019 and its deleveraging efforts has put management in a position to consider additional acquisitions.
“We’ve got more financial flexibility now than we had a year ago, and it’s time to look at new things,” Mr. Kurzius said. “The R.B. Foods acquisition did skew us more to the Americas than we were, and it also skewed us a bit more to the Consumer business than we were pre-acquisition. And we would hope to, over time, balance that.”