McCormick Lifts 2Q Profit Amid Cost Savings

McCormick (NYSE:MKC) booked a stronger-than-expected 11% increase in second-quarter profit on Thursday, helped by improved prices and cost savings that enabled it to invest in emerging markets.

The Sparks, M.D.-based spice maker posted net income of $73.6 million, or 55 cents a share, compared with $66.2 million, or 49 cents a share, in the same quarter last year, narrowly ahead of average analyst estimates polled by Thomson Reuters of 54 cents.

Revenue for the three months ended May 31 was $883.7 million, up 11% from $798.3 million a year ago, beating the Streets view of $855.4 million.

"Our profit performance demonstrates our ability to offset steep cost increases with a combination of pricing actions and cost savings," McCormick CEO Alan Wilson said in a statement. "We are also executing well against our strategy to expand our presence in emerging markets with our current businesses and through acquisitions."

Earlier this week, the company announced an acquisition of Kamis, a Polish maker of spices, seasonings and mustard, for $291 million in an effort to further expand into emerging markets. With the help of other deals and new product introductions during the quarter, McCormick also grew sales in China and India.

Reflecting its recent buys, McCormick raised its sales growth target to the new range of 6% to 8%. However, the company sees earnings in the range of $2.74 to $2.79 a share, slightly lower than the earlier view to reflect acquisition-related charges.