- McCormick & Co. reported a 32% increase in fiscal first-quarter profits and increased its earnings forecast for the year to $3.68 to $3.75 a share, up from the $3.65 to $3.72 range.
- The company said that currency fluctuations did not impact earnings as much as previously anticipated. Profit results were also boosted by acquisitions, increased volumes, and cost-cutting measures.
- McCormick saw a 2% sales jump to $1.03 billion. On a constant-currency basis, that came to a 7% increase, including 6% growth in the consumer segment and 7% in the industrial segment.
McCormick announced in February the company's goal of generating $400 million in cost savings over the next four years, which it anticipates will contribute up to an 11% increase in earnings. The company is on target for at least $95 million in cost reductions for 2016, CEO Lawrence Kurzius said on the earnings call.
In addition to cost savings, acquisitions have been another profit driver. In 2015, the company purchased One World Foods, maker of Stubb's (August), Drogheria & Alimentari (May), and Brand Aromatics (March). These acquisitions have helped expand McCormick's international presence and widen its portfolio to include other related segments, such as premium barbecue sauces.
This year, McCormick has had its eye on British company Premier Foods, which would be the company's largest acquisition. Premier rejected McCormick's 60 pence per share bid ($2.1 billion, according to Reuters), which Premier said "significantly undervalued" the company and its growth prospects.
McCormick said that offer represented a 90% premium over Premier's closing share price on March 22 and is confident that shareholders will react differently to the bid than the board that rejected the offer. To complicate matters, Japan's Nissin bought a 17.3% stake in Premier to become the company's largest stakeholder. Its offer was 63 pence per share.