McCormick's profits move up a notch

- Last updated on GMT

Related tags: Percent, Food

Leading spice company McCormick posted a minute rise in profit in
the fourth quarter as higher costs reduced the firm's margins.

McCormick said it had earned $87.4 million, or 62 cents per share during the last quarter of 2004, up slightly from the $87.1 million for the same period in 2003.

Sales finished at $744 million, up 7 percent with foreign currency befits accounting for almost of the increase. The company said consumer sales were strong in the Americas - where they increased by 16 percent - while in Europe, the firm benefited from the acquisition of Dutch herbs and spices player Silvo.

McCormick said in Wednesday's statement that Silvo had added $4 million to its sales in the quarter and that it expected the company to generate $50 million in sales in 2005.

The company said that the quarter was positive, being earmarked by: "new products, expanded distribution and more effective marketing"​.

Gross profit margin was 42.4 percent in the quarter, against 43.3 percent in the prior year period. It was hit by a correction in operational accounting in an industrial plant along with "higher costs of fuel, employee benefits and other costs."

Looking ahead, the company said it expects sales to grow 4 percent to 7 percent in 2005, while earnings per share should come in between $1.70 and $1.74.

"Based on our current outlook for the year, we expect to achieve a significant portion of the earnings per share increase in the second half of 2005,"​ the company said.

McCormick acquired Silvo in November 2004 for €58 million in cash and, according to the US firm, gave it a leading position in the spices and seasonings market in the Netherlands and Belgium.

Consumer demand for ethnic foods, itself driven by globalisation, travel and more adventurous tastebuds, is stimulating the food industry to design food products that target this growing market.

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