McCormick & Company’s Revenue Rose by 2.4% in Fiscal 4Q15



McCormick & Company’s revenue rose on higher volume

In fiscal 4Q15, McCormick & Company (MKC) saw its sales grow by 2.4% to $1,201.9 million as compared to fiscal 4Q14. This figure includes the impact of unfavorable foreign currency. In constant currency terms, sales rose by 8% in fiscal 4Q15. Sales benefited from acquisitions with a 5% rise in base business led by higher volumes.

Sales beat estimates but not by more than 1%. For fiscal 2015, net sales rose by 6% in constant currency terms. The factors that drove the increase in sales were product innovation, $241 million of spending on brand building, and three strategic acquisitions completed in 2015. Higher volume and product mix contributed 4% to the sales growth for the year.

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Operating profit rose

The adjusted operating income for the quarter increased by 6% to $215.2 million, as compared to fiscal 4Q14. Operating profit rose by 10% on a constant currency basis in fiscal 4Q15. Factors that affected operating profit were increased employee benefit expenses, $9 million for brand marketing, and material cost inflation. However, these factors were offset by higher sales and cost savings.

For fiscal 2015, adjusted operating profit was $614 million, up by 1% when compared to $608 million in fiscal 2014. There was an adverse impact of currency headwinds on adjusted operating income. On a constant currency basis, MKC’s operating income increased by 5% to $548 million for fiscal 2015. Factors that affected operating income were employee benefit expenses, a $14 million increase in brand marketing, and material cost inflation. However, these factors were offset by higher sales and cost savings.

Peer performance

McCormick & Company’s competitors in the industry include ConAgra Foods (CAG), Keurig Green Mountain (GMCR), and Kellogg (K). These companies saw net revenues of $2.7 billion, $969.5 million, and $3.5 billion, respectively, in their last reported quarters.

To gain diversified exposure to MKC, you can invest in ETFs such as the First Trust Consumer Staples AlphaDEX Fund (FXG) and the PowerShares Dynamic Food & Beverage Portfolio (PBJ), which invest 1.6% and 2.7% of their respective portfolios in MKC.


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