McCormick has reported first-quarter sales 19% stronger than last year, thanks in part to incremental sales from the acquisition of Reckitt Benckiser’s food assets.
Sales from RB Foods – as well as Giotti, which McCormick acquired in December 2016 – contributed 12% to the sales increase. The growth was also a result of a 4% favourable impact from currency. The remaining increase was primarily driven by performance in the Americas and Asia/Pacific regions.
Operating income was $184 million in the first quarter, compared to $134 million for the same period the year before.
The company will also reinvest savings from recent US tax cuts into its staff, with one-time bonuses for hourly workers amounting to $1,000.
McCormick completed the acquisition of Reckitt Benckiser’s food unit in August 2017
In the 12 months to the end of November, McCormick recorded its strongest full-year results ever thanks to its acquisitions of Giotti and RB Food. Operating income also rose by 9.5% from $641 million to $702 million.
McCormick expects sales growth for the entire year of between 13% and 15%, and expects to benefit from reductions in US tax rates.
McCormick president and CEO Lawrence E Kurzius said: “McCormick’s first-quarter results were a great start to fiscal year 2018 as we continue to build on the momentum of our milestone year in 2017. Reflecting the successful execution of our strategies, we delivered double-digit sales, adjusted operating income and adjusted earnings per share growth as well as significant operating margin expansion.
“Both our consumer and flavour solutions segments contributed to our constant currency sales growth of 15%. Our consumer segment grew across each region, led by incremental sales from the acquisition of RB Foods in addition to strong growth in our Asia/Pacific region, led by China. Similarly, our flavour solutions business grew across each region through incremental sales from acquisitions, increased sales of our flavours and branded foodservice in the Americas region, as well as greater demand from quick-service restaurants in the Europe, Middle East and Africa (EMEA) and Asia/Pacific regions. Across both of our segments, we are pleased with the Frank’s RedHot and French’s performance, which is in line with our plans.
‘One-time bonus’
“McCormick is a global leader in flavour with a broad and advantaged global portfolio which continues to grow and position us to fully meet the demand for flavour around the world. All over the world, people desire great tasting foods and drinks with rich, authentic flavour. And we deliver flavour across all markets and through all channels. We are focused on growth, delivering against our objectives, strengthening our organisation and building the McCormick of the future. Through the execution of our strategies we are becoming even better positioned to drive future growth and are confident in our continued success. We are balancing our resources and efforts to drive sales with our work to lower costs, and are on-track to achieve at least $100 million of cost savings in 2018 led by our Comprehensive Continuous Improvement (CCI) programme.”
The company has also announced measures to reinvest some of the benefits from its reduced tax burden into a one-time bonus of $1,000 for eligible US hourly employees this May. The company also announced plans to accelerate hourly wage increases to ensure that it continues to attract and retain top staff. Kurzius said the company was ‘showing its commitment’ to its people.
“I want to recognise McCormick employees around the world for their efforts and engagement. With our vision to bring the joy of flavor to life and our steadfast focus on growth, performance, and people, we are confident in our continuing momentum for growth in 2018 to deliver strong financial results and build value for our shareholders.”
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