Things are looking sweeter for the world?s largest spice company.
Sparks-based McCormick and Co. saw gains in both sales and volume for 2007?s first quarter, despite cutting loose 25 percent of its industrial customers.
“What I?m impressed with is the increases despite the culling of marginally contributing customers,” Morningstar equity analyst Ann Gilpin said.
Net sales for the quarter grew 7 percent, consumer business sales 9 percent and industrial business sales 5 percent.
“Fewer marginal customers means more people focused on bettercustomers,” Gilpin said. “That can count for better sales.”
Both Gilpin and McCormick attributed the increase in volume to the 2006 acquisition of Simply Asia Foods, and product innovations like gravity-fed shelving and flip-top caps.
“Initiatives to grow our business are driving sales in a number of our regions around the world,” McCormick Chairman and CEO Robert J. Lawless said in a statement.
Total operating margins are at 11.3 percent, which tells investors how much profit remains after subtracting direct costs and overhead.
The Examiner detailed McCormick?s restructuring plan in a Feb. 19 Top 10 article, when predictions looked rosy but had not yet materialized.
McCormick still faces restructuring charges in 2007, but “you want to see the fruit from the restructuring,” Gilpin said. “We definitely saw that in this quarter.”
Earnings per share were $0.33 compared with $0.11 in the first quarter of 2006. McCormick also announced a quarterly divided of 20 cents.
Gilpin said it?s a typical value, but it?s a good sign from a shareholder perspective that a company wants to share a good quarter.
“The restructuring actions begun in late 2005 are delivering significant cost savings and sustainable margin improvement,” Lawless said in a released statement.
McCormick is part of The Examiner Top 10, which follows the stocks of 10 of the largest publicly held companies in the Baltimore region.
