McCormick Reports Fourth Quarter And Full Year 2012 Results

         McCormick Reports Fourth Quarter And Full Year 2012 Results

PR Newswire

SPARKS, Md., Jan. 24, 2013

SPARKS, Md., Jan. 24, 2013 /PRNewswire/ --McCormick & Company, Incorporated
(NYSE: MKC), a global leader in flavor, today reported financial results for
the fourth quarter and fiscal year 2012. In addition, the company provided a
2013 outlook for strong sales growth and earnings per share of $3.15 to $3.23.


  oDelivered solid results for fiscal year 2012.

       oGrew sales 9% to reach a record $4 billion. The percentage of sales
         in emerging markets rose to 14% from 10% in 2011.
       oIncreased operating income 7% with higher sales and $56 million in
         CCI cost savings. This increase, as well as a favorable tax rate led
         to earnings per share of $3.04.
       oGenerated a record $455 million of cash flow from operations.
       oIncreased cash returned to shareholders through dividends and share
         repurchases by 25%.

  oReported sales growth of 4% in local currency and earnings per share of
    $1.11 in the fourth quarter of 2012.
  oIn 2013, expect solid sales growth from innovation and brand marketing
    initiatives. Projecting earnings per share of $3.15 to $3.23, which
    reflects an underlying double-digit growth rate driven by higher sales and
    at least $45 million in CCI cost savings, offset in part by a year-on-year
    increase in the tax rate and retirement benefit expenses.

Alan D. Wilson, Chairman, President and CEO, commented, "Employees throughout
McCormick made strong progress in 2012 with our initiatives to grow sales,
improve productivity and generate cash. We met our objectives for both sales
growth and earnings per share in 2012, despite a challenging economic
environment.

"Sales grew 9%, reaching $4 billion for the first time in our history, up from
$2 billion 10 years ago and $1 billion 25 years ago. We had a number of
noteworthy accomplishments in 2012. We launched more than 250 new branded
items globally and expanded our innovation facilities and capabilities in five
countries. We invested nearly $200 million in brand marketing support, twice
what we spent in 2005. Including the impact of acquisitions completed in
2011, we took our percentage of sales in emerging markets to 14% in 2012, up
from 10% in 2011. Cost savings from our Comprehensive Continuous Improvement
program – CCI – reached $56 million. Higher sales and our CCI program led to
a 7% increase in operating income and a 9% increase in earnings per share,
which also included the benefit of a lower tax rate. With higher profits, as
well as improved working capital we generated a record cash flow in 2012. We
returned $297 million of cash to shareholders through dividends and share
repurchases, bringing the cumulative five-year total to nearly $1 billion. In
November 2012, McCormick's Board approved a 10% increase in the dividend, our
27^th consecutive annual increase.

"In the fourth quarter, we had strong sales growth in our Europe, Middle East
and Africa region, and a double-digit increase in sales of our consumer
products in China. We also had a significant increase in profit from our
joint ventures and a favorable tax rate. These areas of strength were offset
in part by the unfavorable impact of retailer buying patterns and temporary
supply chain disruptions in the Americas region, and lower demand from
industrial customers in the Asia/Pacific region. In the Americas, we do not
expect any further impact from the fourth quarter supply chain disruptions,
and expect the fluctuations in retailer buying patterns, which related largely
to past pricing actions, to ease as we head into a period of more moderate
material cost inflation. 

"Consumer demand for flavor continues to grow. The spice and seasoning
category is growing at rates from 3% to 8% in our major markets, and our brand
leadership, product innovation and marketing programs have us well-positioned
to meet this demand. As we look ahead to 2013, our growth initiatives are
expected to drive a strong increase in sales. While we expect higher sales
and CCI cost savings to drive underlying profit growth at a double-digit rate,
we expect this growth to be impacted by year-on-year increases in our
retirement benefit costs and tax rate. Importantly, we do not regard the
headwinds from these increases as an impediment to achieving our long-term
growth outlook in 2014 and beyond."

Fiscal Year 2012 Results

The company grew sales 9% for the full year. In local currency the increase
was 10%, which was in line with the company's 2012 objective of 9% to 11%
sales growth in local currency. This increase was led by higher pricing and
from acquisitions completed in 2011, as well as growth in volume and product
mix.

Operating income rose 7% to $578 million in 2012, largely as a result of
higher sales. During 2012, the company was able to offset the dollar impact
of increased material costs with both pricing and CCI cost savings. CCI cost
savings reached $56 million, significantly exceeding an initial target of "at
least $40 million." The company continued to invest in brand marketing
support with an increase of $11 million, supplemented with higher spending
behind price promotions and coupons. The increase in operating income was
also impacted by a $9 million increase in 2012 retirement benefit expenses, as
well as the favorable impact of $11 million of acquisition related transaction
costs recorded in 2011. The 2012 increase in operating income of 7% was below
the company's initial expectation to grow 9% to 11%, largely due to the mix of
sales across businesses, particularly in the fourth quarter.

Earnings per share for the fiscal year was $3.04, within the company's target
range for 2012. Earnings per share rose $0.25 from $2.79 in 2011, with $0.20
from higher operating income and $0.10 from a favorable tax rate, offset by
$0.03 in lower income from unconsolidated operations and $0.02 from higher
interest expense. The favorable tax rate was primarily the result of a
repatriation of cash from foreign subsidiaries, which led to increased foreign
tax credits in the U.S.

The Company reported $455 million in net cash flow from operating activities
in 2012, a significant increase from $340 million in 2011. Factors behind this
increase included higher net income and a minimal increase in inventory
compared to a significant increase in 2011, when inventory rose mainly due to
higher costs, strategic inventory purchases and acquisitions. The Company
returned to its target debt level with an $80 million reduction during 2012.
In addition, the Company returned $297 million of cash to shareholders through
dividends and share repurchases, a 25% increase from $238 million in 2011.

Fourth Quarter 2012 Results

McCormick's fourth quarter sales rose 3%, and in local currency the increase
was 4% when compared to the year-ago period. Pricing actions taken in
response to higher material costs contributed 3% to sales growth, while
acquisitions completed late in 2011 added 1%. Volume and product mix was
comparable to the fourth quarter of 2011, but varied by region. The increase
in volume and product mix was strong in the Europe, Middle East and Africa
(EMEA) region and in the Asia/Pacific consumer business, but offset by a
modest decline in the Americas region and a reduction in the Asia/Pacific
industrial business.

Operating income rose $8 million in the fourth quarter of 2012. In the fourth
quarter of 2011, the company recorded $7 million in acquisition related
transaction costs. Excluding this impact, operating income in the fourth
quarter of 2012 increased slightly from the year ago period. Unfavorable mix
of business affected this result as sales growth was strongest in markets with
less scale and lower margin. In addition, the company recorded a $4 million
charge due to a supplier product quality issue. In 2013, the company expects
to recover a portion of this amount through insurance claims.

Fourth quarter earnings per share rose to $1.11 from $0.98 in the year ago
quarter with $0.05 of the increase due to higher operating income, $0.06 from
a favorable tax rate and $0.02 from an increase in income from unconsolidated
operations. The favorable tax rate was the result of the geographic mix of
earnings across businesses, as well as a repatriation of cash from foreign
subsidiaries, which led to increased foreign tax credits in the U.S.

2013 Financial Outlook

With increased consumer demand for flavor and effective growth strategies,
McCormick expects to grow sales, generate CCI cost savings, invest in brand
marketing support and deliver solid profit results in 2013, even in a global
economic environment that continues to be difficult.

Sales are projected to grow 3% to 5% in local currency, due primarily to
higher volume and product mix. The company has a robust pipeline of new
products for 2013, that includes new varieties of seasonings blends, grilling
products, dessert items and authentic ethnic meals. Plans for increased
digital marketing activity and other brand support are designed to build
consumer awareness and drive volume. At this time, the impact of pricing and
currency on 2013 sales are expected to be minimal, and there is no impact from
acquisitions in the company's guidance. The rate of sales growth in the first
quarter of 2013 is likely to be below the expected growth rate for the fiscal
year. This is largely due to a difficult year-ago comparison for the
industrial business, which grew volume and product mix 10% in the first
quarter of 2012.

As the company progresses through the year, material cost inflation is
expected to moderate to about 3% in 2013, compared to a high single-digit
increase in 2012. The company anticipates that this increase will be offset in
part by at least $45 million of cost savings from its CCI program. However, a
lower interest rate environment has led to an estimated increase of $22
million in 2013 retirement benefit expense. In total, operating income is
expected to grow 6% to 8%. The tax rate in 2012 is expected to be 29.5%, a
significant increase from 26.6% in 2012 which included the favorable impact of
cash repatriation.

Earnings per share is expected to be in a range of $3.15 to $3.23, an increase
of 4% to 6% from 2012 earnings per share of $3.04. Included in this
projection is the year-on-year increase in the tax rate and retirement benefit
expenses, which are expected to reduce earnings per share $0.23 and lower the
growth rate by 8 percentage points. Excluding these factors, higher sales and
CCI cost savings are expected to drive a double-digit underlying increase in
earnings per share for the fiscal year. As a result of a difficult
year-on-year sales comparison for the industrial business and greater pressure
from material costs, earnings per share in the first quarter of 2013 is
expected to be comparable to the year-ago period, when the company reported
$0.55 earnings per share. In fiscal year 2013, the company expects higher
profit to lead to another year of strong cash flow. The company plans to
update its 2013 fiscal year financial outlook upon the completion of the
previously announced agreement to acquire Wuhan Asia-Pacific Condiments Co.
Ltd., which is expected to occur in mid-2013.

Business Segment Results
Consumer Business
(in millions)       Three Months Ended  Twelve Months Ended
                                 11/30/12     11/30/11     11/30/12  11/30/11
Net sales     $744.1       $724.7       $2,415.3  $2,199.9

Operating income          177.2        164.1        456.1     428.4


Fourth quarter consumer business sales grew 3% when compared to the fourth
quarter of 2011. In local currency, sales grew 4% with acquisitions completed
in 2011 accounting for about half of the increase. The remaining increase was
due to pricing actions, taken primarily in 2011 to offset the impact of higher
material costs. Higher volume and product mix in EMEA and the Asia/Pacific
regions offset a decline in the Americas.

  oConsumer sales in the Americas rose slightly from the year ago period,
    with no impact from currency. Pricing actions, taken in response to
    higher material costs, offset a 2% decline in volume and product mix. The
    company reported in the fourth quarter of 2011 that sales declined
    approximately 2% as a result of customer purchases in advance of a price
    increase in the U.S., which created a favorable comparison in the fourth
    quarter of 2012. While additional fluctuations in customer buying
    patterns adversely affected the year-on-year sales growth this period,
    these are expected to ease in 2013 as no major pricing actions are
    currently planned. Affecting volume to a lesser extent were temporary
    supply chain disruptions largely due to Hurricane Sandy.
  oIn the EMEA region, consumer sales grew 3%, and in local currency
    increased 9%. Higher volume and product mix from the base business added
    the majority of this increase, led by a strong pace of innovation, brand
    marketing support and new distribution gained earlier in the year.
    Exports into the Middle East and Africa also contributed to sales growth
    this period.
  oConsumer sales in the Asia/Pacific region rose 32%. Excluding the impact
    of acquisitions and currency, sales grew 7% led by double-digit growth in
    China. 

For the fourth quarter, operating income for the consumer business rose $13
million driven in part by the sales growth and CCI cost savings. Also, in the
fourth quarter of 2011, the company recorded $7 million in acquisition related
transaction costs.

Industrial Business
(in millions) Three Months Ended      Twelve Months
                                                      Ended
                                   11/30/12   11/30/11    11/30/12  11/30/11
Net sales       $401.7     $386.0       $1,598.9  $1,497.7

Operating income                   23.0       27.9         122.2     111.9

Industrial business sales grew 4% when compared to the fourth quarter of 2011,
as a result of pricing actions taken in response to increased material costs.
The impact of currency was minimal.

  oIndustrial sales in the Americas grew 6% as a result of pricing actions
    and with minimal impact from currency. Increased volume and product mix
    of seasonings and flavors to food manufacturers and of branded items to
    foodservice distributors, were offset by lower demand from quick service
    restaurants in this region.
  oIn EMEA, industrial sales rose 10%, and in local currency grew 12%. This
    growth was led by increased demand from quick service restaurants in this
    region which was particularly strong throughout 2012. In addition,
    higher prices contributed 5% to sales growth this period.
  oIn the Asia/Pacific region, industrial sales declined 10%, with minimal
    impact from currency. This compares to a strong year-on-year increase of
    22% in local currency for the fourth quarter of 2011. As in the previous
    two quarters, sales in the fourth quarter of 2012 reflected a lower level
    of promotional activity behind certain quick service restaurant menu items
    flavored by McCormick and fewer new product introductions by these
    customers. 

While industrial business operating income rose 9% for the fiscal year, it
declined $5 million in the fourth quarter, primarily due to a $4 million
charge related to a supplier quality issue. In 2013, the company expects to
recover a portion of this amount. Also, in the fourth quarter of 2012, the
mix of business between regions had an unfavorable impact to operating income
versus the year-ago period.

Live Webcast

As previously announced, McCormick will hold a conference call with analysts
today at 8:00 a.m. ET. The conference call will be webcast live via the
McCormick web site. Go to ir.mccormick.com and follow directions to listen to
the call and access the accompanying presentation materials. At this same
location, a replay of the call will be available following the live call.
Past press releases and additional information can be found at this address.

Forward-looking Information

Certain information contained in this release, including statements concerning
expected performance such as those relating to net sales, earnings, cost
savings, acquisitions and brand marketing support, are "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act
of 1934. These statements may be identified by the use of words such as
"may," "will," "expect," "should," "anticipate," "believe" and "plan." These
statements may relate to: the expected results of operations of businesses
acquired by us, the expected impact of raw material costs and our pricing
actions on our results of operations and gross margins, the expected
productivity and working capital improvements, expected trends in net sales
and earnings performance and other financial measures, the expectations of
pension and postretirement plan contributions, the holding period and market
risks associated with financial instruments, the impact of foreign exchange
fluctuations, the adequacy of internally generated funds and existing sources
of liquidity, such as the availability of bank financing, our ability to issue
additional debt or equity securities and our expectations regarding purchasing
shares of our common stock under the existing authorizations.

These and other forward-looking statements are based on management's current
views and assumptions and involve risks and uncertainties that could
significantly affect expected results. Results may be materially affected by
external factors such as damage to our reputation or brand name, business
interruptions due to natural disasters or similar unexpected events, actions
of competitors, customer relationships and financial condition, the ability to
achieve expected cost savings and margin improvements, the successful
acquisition and integration of new businesses, fluctuations in the cost and
availability of raw and packaging materials, changes in regulatory
requirements, and global economic conditions generally which would include the
availability of financing, interest, inflation rates and investment return on
retirement plan assets, as well as foreign currency fluctuations, risks
associated with our information technology systems, the threat of data
breaches or cyber attacks, and other risks described in the company's filings
with the Securities and Exchange Commission.

Actual results could differ materially from those projected in the
forward-looking statements. The company undertakes no obligation to update or
revise publicly, any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by law.

About McCormick

McCormick & Company, Incorporated is a global leader in flavor. With $4
billion in annual sales, the company manufactures, markets and distributes
spices, seasoning mixes, condiments and other flavorful products to the entire
food industry – retail outlets, food manufacturers and foodservice businesses.

Every day, no matter where or what you eat, you can enjoy food flavored by
McCormick. McCormick Brings Passion to Flavor™.

To learn more please visit us at www.mccormickcorporation.com.

For information contact:

Investor Relations:
Joyce Brooks (410) 771-7244 or joyce_brooks@mccormick.com

Corporate Communications:
Lori Robinson (410) 527-6004 or lori_robinson@mccormick.com

(Financial tables follow)

McCormick & Company, Incorporated
Consolidated Income Statement
for periods ending November 30 (millions except per
share data)
                              Three Months Ended          Twelve Months Ended
                              2012          2011          2012       2011
Net sales                     $  1,145.8   $  1,110.7   $        $  
                                                          4,014.2    3,697.6
Cost of goods sold            663.4         631.6         2,396.4    2,175.1
Gross profit                  482.4         479.1         1,617.8    1,522.5
Gross profit margin           42.1%         43.1%         40.3%      41.2%
Selling, general and          282.2         287.1         1,039.5    982.2
administrative expense
Operating income              200.2         192.0         578.3      540.3
Interest expense              13.9          13.6          54.6       51.2
Other income (expense), net   0.7           (0.1)         2.4        2.3
Income from consolidated
operations before income      187.0         178.3         526.1      491.4
taxes
Income taxes                  46.1          51.1          139.8      142.6
Net income from consolidated  140.9         127.2         386.3      348.8
operations
Income from unconsolidated    7.6           4.5           21.5       25.4
operations
Net income                    $   148.5  $   131.7  $       $   
                                                          407.8     374.2
Earnings per share - basic    $          $          $      $    
                              1.12         0.99         3.07      2.82
Earnings per share - diluted  $          $          $      $    
                              1.11         0.98         3.04      2.79
Average shares outstanding -  132.5         132.9         132.7      132.7
basic
Average shares outstanding -  134.1         134.3         134.3      134.3
diluted



McCormick & Company, Incorporated
Consolidated Balance Sheet
at November 30 (millions)
                                            2012              2011
Assets
Cash and cash equivalents                   $      79.0  $      53.9
Trade accounts receivable, net              465.9             427.0
Inventories                                 615.0             613.7
Prepaid expenses and other current assets   125.5             128.3
Total current assets                        1,285.4           1,222.9
Property, plant and equipment, net          547.3             523.1
Goodwill                                    1,695.3           1,694.2
Intangible assets, net                      323.5             350.0
Investments and other assets                313.9             297.6
Total assets                                $   4,165.4    $   4,087.8
Liabilities
Short-term borrowings and current portion   $     392.6   $     222.4
of long-term debt
Trade accounts payable                      375.8             366.6
Other accrued liabilities                   419.2             404.3
Total current liabilities                   1,187.6           993.3
Long-term debt                              779.2             1,029.7
Other long-term liabilities                 498.4             446.3
Total liabilities                           2,465.2           2,469.3
Shareholders' equity
Common stock                                908.2             821.9
Retained earnings                           934.6             838.8
Accumulated other comprehensive loss       (159.9)           (59.0)
Non-controlling interests                   17.3              16.8
Total shareholders' equity                  1,700.2           1,618.5
Total liabilities and shareholders' equity  $   4,165.4    $   4,087.8



McCormick & Company, Incorporated
Consolidated Cash Flow Statement
for the year ended November 30 (millions)
                                            2012              2011
Operating activities
Net income                                  $     407.8   $     374.2
Adjustments to reconcile net income to net
cash provided by operating activities:
 Depreciation and amortization            102.8             98.3
 Stock-based compensation                 20.2              13.0
 Income from unconsolidated operations    (21.5)            (25.4)
 Changes in operating assets and          (69.9)            (136.3)
liabilities
Dividends from unconsolidated affiliates    15.6              16.2
 Net cash provided by operating           455.0             340.0
activities
Investing activities
Acquisitions of businesses and joint        -                 (441.4)
venture interests
Capital expenditures                        (110.3)           (96.7)
Proceeds from sale of property, plant and   1.3               0.6
equipment
 Net cash used in investing activities    (109.0)           (537.5)
Financing activities
Short-term borrowings, net                  (76.7)            216.7
Long-term debt borrowings                   0.8               252.0
Long-term debt repayments                   (4.6)             (101.1)
Proceeds from exercised stock options       53.1              58.0
Common stock acquired by purchase           (132.2)           (89.3)
Dividends paid                              (164.7)           (148.5)
 Net cash (used in) provided by           (324.3)           187.8
financing activities
Effect of exchange rate changes on cash
and
cash equivalents                            3.4               12.8
Increase in cash and cash equivalents       25.1              3.1
Cash and cash equivalents at beginning of   53.9              50.8
year
Cash and cash equivalents at end of year    $      79.0  $      53.9

SOURCE McCormick & Company, Incorporated

Website: http://www.mccormickcorporation.com