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McCormick & Company Inc. Reports Operating Results (10-K)

January 27, 2012 | About:
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10qk

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McCormick & Company Inc. (MKC) filed Annual Report for the period ended 2011-11-30.

Mccormick & Co. Inc. has a market cap of $6.85 billion; its shares were traded at around $51.07 with a P/E ratio of 18.4 and P/S ratio of 2.1. The dividend yield of Mccormick & Co. Inc. stocks is 2.4%. Mccormick & Co. Inc. had an annual average earning growth of 7.9% over the past 10 years. GuruFocus rated Mccormick & Co. Inc. the business predictability rank of 5-star.

Highlight of Business Operations:

In 2011, our financial results varied from these long-term goals. Sales grew 11%, exceeding the long-term objective of 4% to 6%, due primarily to increased prices taken in response to significant increases in raw and packaging material costs. The increase in operating income of 6%, was close to our long term expectations. Several factors affected earnings per share which was $2.79 in 2011 compared to $2.75 in 2010. As explained in more detail in the following section, we recorded transaction costs associated with completed acquisitions, which lowered 2011 earnings per share $0.07. In addition, we recorded the reversal of a significant tax accrual in 2010 that added $0.10 to earnings per share.

We grew consumer business sales 10.0% in 2011 when compared to 2010. Higher pricing added 5.1% and favorable foreign exchange rates added 1.8%. Volume and product mix rose 3.1%, which included a 2.6% increase from acquisitions in 2011.

Consumer business operating income increased $26.0 million to $428.4 million, a 6.5% increase from 2010. The profit impact of higher sales and CCI savings were offset in part by increased material costs. We also funded an increased investment in brand marketing support which rose $15 million in 2011, including a $4 million increase that related to acquisitions. While we expect the 2011 acquisitions to be accretive to 2012 operating income, profit from these businesses had a minimal impact on 2011 operating income during a period of integration. In 2011, we recorded $10.9 million of transaction costs related to acquisitions completed in 2011, which lowered operating income margin by 0.5%. Operating income margin was 19.5% in 2011 compared to 20.1% in 2010.

Consumer business operating income excluding restructuring charges increased 1.1% from 2009. The profit impact of higher sales and CCI cost savings, were largely offset by a $19 million increase in brand marketing support, as well as higher retirement benefit costs. Operating income margin was 20.1% in 2010. In the fourth quarter of 2010 there was a decline of operating income when compared to the fourth quarter of 2009, which was partially due to increasing commodity costs. We took pricing actions in late 2010 and early in fiscal year 2011 in response to these cost increases.

In EMEA, industrial business sales rose 7.9%, led by a 4.4% increase from favorable volume and product mix. Higher demand from quick service restaurants reflected increased consumer traffic and new product wins. Sales of branded foodservice products were higher compared to a weak performance in 2009 when sales were disrupted by the bankruptcy of a major foodservice distributor in the U.K. Favorable foreign exchange rates increased sales 3.0% and pricing added 0.5%.

Read the The complete Report

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