McCormick & Company Posts Spicy First Quarter, Sour Guidance

McCormick & Company MKC posted better-than-expected earnings and revenue in the first quarter of fiscal 2013. The Sparks, Maryland firm posted earnings of $0.57 per share, up 3.6 percent versus Q1 2012. This edged the Wall Street consensus of $0.56. First quarter revenue climbed three percent to $934.4 million and easily topped analysts' expectations of $922.66 million. Consumer Business Spices Up McCormick's consumer business grew 6.7 percent year-over-year with sales of $569.8 million. Growth in this segment was highest in the Asia/Pacific region at 13 percent. Meanwhile, sales grew seven percent in the Americas and four percent in Europe, the Middle East and Africa (EMEA). Unappetizing Industrial Sales McCormick's industrial sales business declined two percent during the first quarter. The largest decline was in the Asia/Pacific region at 12 percent. Specifically, lower business traffic in Chinese quick service restaurants negatively impacted sales in this region. As it is a supplier of KFC, it's fair to assume the poultry scare that plagued the chicken chain culled a portion of McCormick's sales in China. The company does, however, expect sales to rebound in the world's second largest economy during the second quarter. It believes its customers' plans to add locations and products and rev up promotions will drive growth in the world's most populous nation. Meanwhile, sales in the Americas dropped three percent during the quarter. However, the EMEA region proved to be a beacon of light, with revenue jumping seven percent. Sour Guidance McCormick expects second quarter EPS to round out near $0.60, which would be significantly below the $0.65 Wall Street consensus. The company expects sales to grow three to five percent in 2013. If this pans out, the spice manufacturer will finish with revenue in the $4.13 to $4.21 billion range - just short of the $4.22 billion analysts expect. And, McCormick anticipates full-year EPS of $3.15 to $3.23. At the middle-ground of $3.19, it would close below expectations of $3.21. The firm expects to update its guidance in mid-2013 upon completion of its acquisition of Wuhan Asia Pacific Condiments Co., Ltd. Bitter Taste on Wall Street McCormick has held steady in the low $70s for nearly a month. And, it continues to do so on Tuesday, despite its weak guidance. Still, after closing above $73.50 on Friday, the stock is down for the second consecutive day. It has hovered in the $71.50-$72.50 range as trading gets underway. McCormick is down around 0.5 percent on Tuesday.