McCormick & Co. (MKC), a maker of spices and other flavored products, fell the most in more than three years after forecasting annual earnings and sales that trailed analysts’ estimates.
McCormick tumbled 6.3 percent to close at $62.37 in New York, it’s biggest one-day decline since March 2009. The company gained 26 percent last year, while the Standard & Poor’s 500 Index advanced 13 percent.
McCormick, which sells brands under its own name, Lawry’s and Club House, said the spice and seasoning category are growing between 3 percent and 8 percent in major markets. However, higher sales and cost savings will probably be impacted by an increased tax rate and retirement benefit costs at the Sparks, Maryland-based company.
“Importantly, we do not regard the headwinds from these increases as an impediment to achieving our long-term growth outlook in 2014 and beyond,” Chief Executive Officer Alan D. Wilson said in a statement today.
McCormick forecast 2013 earnings of $3.15 to $3.23 a share. That compared to an average analyst estimate of $3.36, according to data compiled by Bloomberg. The company also projected sales growth of 3 percent to 5 percent in local currency. Analysts had estimated sales of $4.3 billion in 2013, a more than 7 percent jump from last year when it posted $4 billion.
Fourth-quarter net income was $148.5 million, or $1.11 a share, compared with $131.7 million, or 98 cents, a year earlier, the company said. Analysts had estimated $1.14. Revenue $1.15 billion trailed an an average estimate of $1.17 billion.
McCormick, which gets about 40 percent of its revenue from international markets, said consumer sales in Europe, the Middle East, and Africa advanced 3 percent in the quarter. Excluding the impact of acquisitions and currency, such sales rose 7 percent in Asia, Pacific, led by double-digit growth in China, according to the statement.
The company is starting 2013 with “sluggish European and Chinese markets” and “continued cost inflation,” Jonathan Feeney, an analyst at Janney Montgomery Scott LLC in Philadelphia, wrote in an investor note. He has a neutral rating on the stock.
“The market appeared to be anticipating an earnings step- up,” Feeney wrote. “We see a more steady performance tempered by some modest Europe and macro risk.”
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