McCormick Lowers Fiscal Year 2011 Earnings Guidance

Story Stocks^® Archive

Last Update: 30-Jun-11 11:42 ET

McCormick (MKC $49.64 -1.36) reported second quarter earnings of $0.55 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.54.

Revenues rose 10.7% year/year to $883.7 million versus the $855.4 million consensus.

For its fiscal year 2011, the company, sees earnings at $2.74 to $2.79, which may not be comparable to the $2.83 Capital IQ Consensus Estimate.

McCormick has adjusted its financial outlook for 2011 to reflect its two June acquisitions. The co has raised its projected range of sales growth in local currency to 6 to 8%, to include 1% of incremental sales from Kohinoor and Kamis. In addition, the sales impact of favorable currency exchange rates is now estimated to be 2%. This is a reduction of $0.06 from the previous earnings per share outlook to reflect the $9 million in transaction costs related to Kohinoor and Kamis.

Third quarter earnings per share will be affected by $7 million of these costs with an estimated $0.05 reduction to earnings per share. With an estimated completion of these two agreements by the end of McCormick's Q3, only a portion of annual sales will be recorded in the co's 2011 financial results. Profit from these businesses will be minimal in 2011 due to integration costs and initial investments in growth, but is expected to be $0.07 to $0.09 accretive to earnings per share in 2012. In 2011, the co expects to record $9 million in transaction related costs, of which $2 million was recorded in the second quarter with the remaining $7 million expected to lower earnings per share in the third quarter by $0.05.