McCormick Reports Fourth Quarter And Full Year 2012 Results
- Delivered solid results for fiscal year 2012.
- Grew sales 9% to reach a record
$4 billion . The percentage of sales in emerging markets rose to 14% from 10% in 2011. - Increased operating income 7% with higher sales and
$56 million in CCI cost savings. This increase, as well as a favorable tax rate led to earnings per share of$3.04 . - Generated a record
$455 million of cash flow from operations. - Increased cash returned to shareholders through dividends and share repurchases by 25%.
- Grew sales 9% to reach a record
- Reported sales growth of 4% in local currency and earnings per share of
$1.11 in the fourth quarter of 2012. - In 2013, expect solid sales growth from innovation and brand marketing initiatives. Projecting earnings per share of
$3.15 to $3.23 , which reflects an underlying double-digit growth rate driven by higher sales and at least$45 million in CCI cost savings, offset in part by a year-on-year increase in the tax rate and retirement benefit expenses.
"Sales grew 9%, reaching
"In the fourth quarter, we had strong sales growth in our
"Consumer demand for flavor continues to grow. The spice and seasoning category is growing at rates from 3% to 8% in our major markets, and our brand leadership, product innovation and marketing programs have us well-positioned to meet this demand. As we look ahead to 2013, our growth initiatives are expected to drive a strong increase in sales. While we expect higher sales and CCI cost savings to drive underlying profit growth at a double-digit rate, we expect this growth to be impacted by year-on-year increases in our retirement benefit costs and tax rate. Importantly, we do not regard the headwinds from these increases as an impediment to achieving our long-term growth outlook in 2014 and beyond."
Fiscal Year 2012 Results
The company grew sales 9% for the full year. In local currency the increase was 10%, which was in line with the company's 2012 objective of 9% to 11% sales growth in local currency. This increase was led by higher pricing and from acquisitions completed in 2011, as well as growth in volume and product mix.
Operating income rose 7% to
Earnings per share for the fiscal year was
The Company reported
Operating income rose
Fourth quarter earnings per share rose to
2013 Financial Outlook
With increased consumer demand for flavor and effective growth strategies,
Sales are projected to grow 3% to 5% in local currency, due primarily to higher volume and product mix. The company has a robust pipeline of new products for 2013, that includes new varieties of seasonings blends, grilling products, dessert items and authentic ethnic meals. Plans for increased digital marketing activity and other brand support are designed to build consumer awareness and drive volume. At this time, the impact of pricing and currency on 2013 sales are expected to be minimal, and there is no impact from acquisitions in the company's guidance. The rate of sales growth in the first quarter of 2013 is likely to be below the expected growth rate for the fiscal year. This is largely due to a difficult year-ago comparison for the industrial business, which grew volume and product mix 10% in the first quarter of 2012.
As the company progresses through the year, material cost inflation is expected to moderate to about 3% in 2013, compared to a high single-digit increase in 2012. The company anticipates that this increase will be offset in part by at least
Earnings per share is expected to be in a range of
Business Segment Results |
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Consumer Business |
||||
(in millions) |
Three Months Ended |
Twelve Months Ended |
||
11/30/12 |
11/30/11 |
11/30/12 |
11/30/11 |
|
Net sales |
$744.1 |
$724.7 |
$2,415.3 |
$2,199.9 |
Operating income |
177.2 |
164.1 |
456.1 |
428.4 |
Fourth quarter consumer business sales grew 3% when compared to the fourth quarter of 2011. In local currency, sales grew 4% with acquisitions completed in 2011 accounting for about half of the increase. The remaining increase was due to pricing actions, taken primarily in 2011 to offset the impact of higher material costs. Higher volume and product mix in EMEA and the
- Consumer sales in the
Americas rose slightly from the year ago period, with no impact from currency. Pricing actions, taken in response to higher material costs, offset a 2% decline in volume and product mix. The company reported in the fourth quarter of 2011 that sales declined approximately 2% as a result of customer purchases in advance of a price increase in the U.S., which created a favorable comparison in the fourth quarter of 2012. While additional fluctuations in customer buying patterns adversely affected the year-on-year sales growth this period, these are expected to ease in 2013 as no major pricing actions are currently planned. Affecting volume to a lesser extent were temporary supply chain disruptions largely due to Hurricane Sandy. - In the EMEA region, consumer sales grew 3%, and in local currency increased 9%. Higher volume and product mix from the base business added the majority of this increase, led by a strong pace of innovation, brand marketing support and new distribution gained earlier in the year. Exports into the
Middle East andAfrica also contributed to sales growth this period. - Consumer sales in the
Asia/Pacific region rose 32%. Excluding the impact of acquisitions and currency, sales grew 7% led by double-digit growth in China.
For the fourth quarter, operating income for the consumer business rose
Industrial Business |
||||
(in millions) |
Three Months Ended |
Twelve Months Ended |
||
11/30/12 |
11/30/11 |
11/30/12 |
11/30/11 |
|
Net sales |
$401.7 |
$386.0 |
$1,598.9 |
$1,497.7 |
Operating income |
23.0 |
27.9 |
122.2 |
111.9 |
Industrial business sales grew 4% when compared to the fourth quarter of 2011, as a result of pricing actions taken in response to increased material costs. The impact of currency was minimal.
- Industrial sales in the
Americas grew 6% as a result of pricing actions and with minimal impact from currency. Increased volume and product mix of seasonings and flavors to food manufacturers and of branded items to foodservice distributors, were offset by lower demand from quick service restaurants in this region. - In EMEA, industrial sales rose 10%, and in local currency grew 12%. This growth was led by increased demand from quick service restaurants in this region which was particularly strong throughout 2012. In addition, higher prices contributed 5% to sales growth this period.
- In the
Asia/Pacific region, industrial sales declined 10%, with minimal impact from currency. This compares to a strong year-on-year increase of 22% in local currency for the fourth quarter of 2011. As in the previous two quarters, sales in the fourth quarter of 2012 reflected a lower level of promotional activity behind certain quick service restaurant menu items flavored byMcCormick and fewer new product introductions by these customers.
While industrial business operating income rose 9% for the fiscal year, it declined
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As previously announced,
Forward-looking Information
Certain information contained in this release, including statements concerning expected performance such as those relating to net sales, earnings, cost savings, acquisitions and brand marketing support, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "may," "will," "expect," "should," "anticipate," "believe" and "plan." These statements may relate to: the expected results of operations of businesses acquired by us, the expected impact of raw material costs and our pricing actions on our results of operations and gross margins, the expected productivity and working capital improvements, expected trends in net sales and earnings performance and other financial measures, the expectations of pension and postretirement plan contributions, the holding period and market risks associated with financial instruments, the impact of foreign exchange fluctuations, the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing, our ability to issue additional debt or equity securities and our expectations regarding purchasing shares of our common stock under the existing authorizations.
These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Results may be materially affected by external factors such as damage to our reputation or brand name, business interruptions due to natural disasters or similar unexpected events, actions of competitors, customer relationships and financial condition, the ability to achieve expected cost savings and margin improvements, the successful acquisition and integration of new businesses, fluctuations in the cost and availability of raw and packaging materials, changes in regulatory requirements, and global economic conditions generally which would include the availability of financing, interest, inflation rates and investment return on retirement plan assets, as well as foreign currency fluctuations, risks associated with our information technology systems, the threat of data breaches or cyber attacks, and other risks described in the company's filings with the
Actual results could differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
About
Every day, no matter where or what you eat, you can enjoy food flavored by McCormick. McCormick Brings Passion to Flavor™.
To learn more please visit us at www.mccormickcorporation.com.
For information contact:
Investor Relations:
(Financial tables follow)
McCormick & Company, Incorporated |
|||||||
Consolidated Income Statement |
|||||||
for periods ending November 30 (millions except per share data) |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
2012 |
2011 |
2012 |
2011 |
||||
Net sales |
$ 1,145.8 |
$ 1,110.7 |
$ 4,014.2 |
$ 3,697.6 |
|||
Cost of goods sold |
663.4 |
631.6 |
2,396.4 |
2,175.1 |
|||
Gross profit |
482.4 |
479.1 |
1,617.8 |
1,522.5 |
|||
Gross profit margin |
42.1% |
43.1% |
40.3% |
41.2% |
|||
Selling, general and administrative expense |
282.2 |
287.1 |
1,039.5 |
982.2 |
|||
Operating income |
200.2 |
192.0 |
578.3 |
540.3 |
|||
Interest expense |
13.9 |
13.6 |
54.6 |
51.2 |
|||
Other income (expense), net |
0.7 |
(0.1) |
2.4 |
2.3 |
|||
Income from consolidated operations before income taxes |
187.0 |
178.3 |
526.1 |
491.4 |
|||
Income taxes |
46.1 |
51.1 |
139.8 |
142.6 |
|||
Net income from consolidated operations |
140.9 |
127.2 |
386.3 |
348.8 |
|||
Income from unconsolidated operations |
7.6 |
4.5 |
21.5 |
25.4 |
|||
Net income |
$ 148.5 |
$ 131.7 |
$ 407.8 |
$ 374.2 |
|||
Earnings per share - basic |
$ 1.12 |
$ 0.99 |
$ 3.07 |
$ 2.82 |
|||
Earnings per share - diluted |
$ 1.11 |
$ 0.98 |
$ 3.04 |
$ 2.79 |
|||
Average shares outstanding - basic |
132.5 |
132.9 |
132.7 |
132.7 |
|||
Average shares outstanding - diluted |
134.1 |
134.3 |
134.3 |
134.3 |
McCormick & Company, Incorporated |
||||
Consolidated Balance Sheet |
||||
at November 30 (millions) |
||||
2012 |
2011 |
|||
Assets |
||||
Cash and cash equivalents |
$ 79.0 |
$ 53.9 |
||
Trade accounts receivable, net |
465.9 |
427.0 |
||
Inventories |
615.0 |
613.7 |
||
Prepaid expenses and other current assets |
125.5 |
128.3 |
||
Total current assets |
1,285.4 |
1,222.9 |
||
Property, plant and equipment, net |
547.3 |
523.1 |
||
Goodwill |
1,695.3 |
1,694.2 |
||
Intangible assets, net |
323.5 |
350.0 |
||
Investments and other assets |
313.9 |
297.6 |
||
Total assets |
$ 4,165.4 |
$ 4,087.8 |
||
Liabilities |
||||
Short-term borrowings and current portion of long-term debt |
$ 392.6 |
$ 222.4 |
||
Trade accounts payable |
375.8 |
366.6 |
||
Other accrued liabilities |
419.2 |
404.3 |
||
Total current liabilities |
1,187.6 |
993.3 |
||
Long-term debt |
779.2 |
1,029.7 |
||
Other long-term liabilities |
498.4 |
446.3 |
||
Total liabilities |
2,465.2 |
2,469.3 |
||
Shareholders' equity |
||||
Common stock |
908.2 |
821.9 |
||
Retained earnings |
934.6 |
838.8 |
||
Accumulated other comprehensive loss |
(159.9) |
(59.0) |
||
Non-controlling interests |
17.3 |
16.8 |
||
Total shareholders' equity |
1,700.2 |
1,618.5 |
||
Total liabilities and shareholders' equity |
$ 4,165.4 |
$ 4,087.8 |
||
McCormick & Company, Incorporated |
|||||
Consolidated Cash Flow Statement |
|||||
for the year ended November 30 (millions) |
|||||
2012 |
2011 |
||||
Operating activities |
|||||
Net income |
$ 407.8 |
$ 374.2 |
|||
Adjustments to reconcile net income to net |
|||||
cash provided by operating activities: |
|||||
Depreciation and amortization |
102.8 |
98.3 |
|||
Stock-based compensation |
20.2 |
13.0 |
|||
Income from unconsolidated operations |
(21.5) |
(25.4) |
|||
Changes in operating assets and liabilities |
(69.9) |
(136.3) |
|||
Dividends from unconsolidated affiliates |
15.6 |
16.2 |
|||
Net cash provided by operating activities |
455.0 |
340.0 |
|||
Investing activities |
|||||
Acquisitions of businesses and joint venture interests |
- |
(441.4) |
|||
Capital expenditures |
(110.3) |
(96.7) |
|||
Proceeds from sale of property, plant and equipment |
1.3 |
0.6 |
|||
Net cash used in investing activities |
(109.0) |
(537.5) |
|||
Financing activities |
|||||
Short-term borrowings, net |
(76.7) |
216.7 |
|||
Long-term debt borrowings |
0.8 |
252.0 |
|||
Long-term debt repayments |
(4.6) |
(101.1) |
|||
Proceeds from exercised stock options |
53.1 |
58.0 |
|||
Common stock acquired by purchase |
(132.2) |
(89.3) |
|||
Dividends paid |
(164.7) |
(148.5) |
|||
Net cash (used in) provided by financing activities |
(324.3) |
187.8 |
|||
Effect of exchange rate changes on cash and |
|||||
cash equivalents |
3.4 |
12.8 |
|||
Increase in cash and cash equivalents |
25.1 |
3.1 |
|||
Cash and cash equivalents at beginning of year |
53.9 |
50.8 |
|||
Cash and cash equivalents at end of year |
$ 79.0 |
$ 53.9 |
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SOURCE