- McCormick posted $1.19 billion in revenue during its third quarter, up 9% from $1.09 billion in the same period a year ago, according to a company release. The figure was ahead of the FactSet consensus of $1.157 billion, MarketWatch reported. The company credited the increase to pricing, volume, product mix and the recent acquisition of Reckitt Benckiser Foods. Net income was $108.2 million, down from $127.7 million in the same 2016 period.
- The Maryland-based spice company adjusted its 2017 fiscal year outlook upward, projecting a 9% to 10% rise in sales — an increase that reflects recent acquisitions and growth momentum in its business.
- "We are continuing to capitalize on the global and growing consumer interest in healthy, flavorful eating, the source and quality of ingredients, and sustainable and socially responsible practices," Lawrence Kurzius, McCormick 's CEO, said in a statement. "We are aligned with the increased demand for great taste and healthy eating and are confident in our plans to drive growth."
The earnings report is the first since McCormick announced in July it would buy Reckitt Benckiser's food division for $4.2 billion. The transaction, just completed last month, adds the iconic French's mustard, Cattlemen's and Frank's RedHot brands to a portfolio consisting of an extensive line of spices, seasoning mixes and condiments.
McCormick has been branching out and recently announced a fall lineup of 40 new products, many of which are a departure from its previous offerings. McCormick, founded in 1889 in Baltimore, has a long record of producing spices, but now appears to be repositioning itself with trendy additions to its lineup. The new products — bone broth, slow-cooker seasonings and Asian noodles, among other items — are designed to appeal to busy people who can't spare a lot of preparation time but still want flavorful home-cooked meals.
McCormick has said it intends to capitalize on the interest by millennials in ethnic flavors and home cooking. The company has a wide range of spice blends with brands such as Thai Kitchen, Zatarain’s, Simply Asia and Lawry’s. Home cooking and using spices to reduce salt and sugar have led to a strong uptick in direct-to-consumer sales of spices.
Andrew Lazar, a senior analyst for packaged food with Barclays, said in a report following the earnings release that solid underlying organic sales growth during the quarter, particularly in the Americas, "augurs well for positive sentiment" toward McCormick's shares.
"That said, more clarity around the impact of the acquisition (particularly on gross margin) will be key for shares today," he added.
By continuing to bring out innovative products and engage in active repositioning and strategic acquisitions, McCormick seems to charting a solid course. The company seems ideally positioned to capitalize on the consumer's interest to eat healthier, while at the same time not losing the flavor and taste they crave in their food. While spice has long been McCormick's core, its recent acquisitions and new product rollouts show it's looking to branch out into new areas while still staying within its comfort zone of flavor.