June 26--McCormick & Co. saw its profit jump nearly 8 percent in the second quarter amid higher sales to both consumers and food service companies, the Sparks-based spice maker said Thursday.
Net income increased to $84.5 million, or 64 cents per share, in the three months that ended May 31, from $78.6 million, or 59 cents per share, in the second quarter a year earlier. The results beat analysts' expectations of 62 cents per share but missed an anticipated 4 percent increase in revenue.
Sales were up 3 percent, to $1.03 billion, with growth especially strong in international markets. Sales growth at Wuhan Asia-Pacific Condiments, which McCormick acquired in May 2013, helped boost results, the company said.
"Demand for flavor is growing globally, and McCormick is meeting this demand with its range of products that include innovative new items, healthy recipe ideas, ethnic cuisine and family favorites," McCormick CEO Alan D. Wilson said in the announcement.
Since last year, McCormick has faced more intense competition for consumer business in stores in the U.S. and Canada, where sales decreased 5 percent and the company has been taking steps to boost its brand awareness.
During this fiscal year, the company plans to invest at least $25 million in increased marketing to help drive sales of both new and core products. The company will introduce items this year such as new skillet sauces, gluten-free recipe mixes and premium herbs as it works to boost brand awareness, Wilson said.
That strategy should lead to improvements in the U.S. consumer business toward the end of this year, the company said, noting that improved sales of recipe mixes is one early sign of progress.
Strong cash flow has allowed McCormick this year to return $223 million to shareholders in dividends and share repurchases. The company on Thursday reaffirmed plans to boost sales in fiscal 2014 by between 3 percent and 5 percent and to reach earnings per share of between $3.22 to $3.29.
"We continue to adapt to a changing environment as we pursue global growth opportunities and address competitive challenges in certain markets," Wilson said.
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