McCormick's acquisitions, new products drive record fourth-quarter sales
Fourth-quarter sales for McCormick & Co. rose 21.5% to $1.49 billion from the year-ago period, according to a company release. Sales attributed to Reckitt Benckiser's food division and Enrico Giotti — which McCormick acquired in August 2017 and December 2016, respectively — accounted for 15% of the increase. The company posted net income of $175.7 million, a 27.1% jump from the $157.4 million posted during the fourth quarter of 2016.
For its 2018 fiscal year, the Maryland-based spice and condiments company said it expects a 12% to 14% increase in sales. The outlook reflects the addition of new products, brand marketing and expanded distribution. McCormick also said it plans to achieve $100 million in cost savings this year.
"We exceeded each of our key financial targets in 2017," Lawrence E. Kurzius, McCormick's chairman, president and CEO, said in the release. "Our sales growth and focus on profit realization drove excellent financial results across both our consumer and industrial segments. In addition to our strong base business and new product growth, the acquisitions of RB Foods, Giotti and Gourmet Garden contributed to higher sales as valuable additions to our global portfolio of flavors."
McCormick's fourth-quarter performance was boosted by pricing, volume, product mix and the recent acquisition of Reckitt Benckiser's food division — adding its French's mustard and Frank's RedHot brands to the company's portfolio — along with the 2016 purchase of Italian flavor manufacturer Giotti.
The iconic Maryland-based company, founded in 1889, saw sales increases in both its consumer and industrial segments. Consumer sales in the Americas were up 25% from the fourth quarter of 2016, with RB Foods responsible for much of that increase. Pricing, new products and expanded distribution were credited for the rise, particularly in the McCormick and Lawry's branded spices and seasonings, McCormick recipe mixes and breakfast products, and Gourmet Garden products, the company said.
Sales in the industrial segment also were up 25% from the year-ago period, led by the popularity of McCormick snack seasonings in the U.S. and Mexico, plus double-digit increases in the company's savory flavor products and continued growth in its branded foodservice.
McCormick has been busy growing its product line. It added 40 new products last fall, many of which are a departure from its previous offerings. The company already 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. As shoppers look to cut out butter, salt and artificial ingredients, they still demand flavor, placing McCormick in the sweet spot.
McCormick 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.
Kurzius, the company's chairman, president and CEO, called 2017 "a milestone year" for McCormick.
"With new ideas, innovation and purpose, we are proactively adapting to changes in the industry. 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," he said in a statement.
With a record quarter behind it and plans for more growth ahead, the spice company seems well-positioned to continue offering on-trend flavoring products and solidifying its position in the global market.
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