Spice maker McCormick & Co. (MKC) nipped past analyst expectations on Tuesday with its first quarter fiscal 2013 financial report as consumer business sales grew 7 percent and sales in emerging markets blossomed, while the company’s industrial segment started the year slowly.
For the first quarter ended February 28, the Sparks, Maryland-based company reported total sales of $934.4 million, compared to $906.7 million in the year prior quarter. Net income for the quarter was $76.0 million, or 57 cents per share, up from $74.5 million, or 56 cents per share, in the first quarter of fiscal 2012.
Both figures topped Wall Street expectations of EPS of 56 cents on revenue of $922.7 million.
Growth in emerging markets of 14 percent and greater marketing efforts help buoy sales while the industrial arm of operations experienced a 2 percent decline compared the a 13 percent growth in the year earlier quarter. McCormick had expected the contraction due to softness in quick service restaurants in China and the U.S., although it anticipates some recovery in upcoming quarters.
Revenue from the company’s consumer business, its largest segment increased from $534.2 million last year to $569.8 million. China was a hefty contributor with 20 percent sales growth in local currency. In August, McCormick agreed to spend $141 million to buy bouillon maker Whan Asia-Pacific Condiments Co. Ltd. to expand its presence in China.
Sales in the industrial segment fell to $364.6 million in the recent quarter from $372.5 million last year.
“Our financial results for the first quarter included strong growth in our consumer business, earnings per share slightly ahead of our initial outlook and a great start to cash flow for 2013,” said Alan D. Wilson, president and chairman of McCormick.
Cash flow from operations increased from $23 million in Q1 fiscal 2012 to $32 million in the latest quarter, largely because of a reduction in inventory.
Profits were negatively impacted by higher material expenses and about a $5 million increase in retirement benefit packages. The company said it expects similar costs in the second quarter as well.
McCormick also reaffirmed its outlook for the full year 2013, saying that it still expects sales growth between 3 percent and 5 percent. Earnings per share are expected in the range of $3.15 to $3.23.
Shares of MKC have been on a solid upward path over the past 52 weeks, rising about 35 percent, including 13 percent this year alone. Shares are trading right around $73 on Tuesday.