McCormick posts a 57% increase in operating profits


McCormick & Co. reported another quarter of spicy profits yesterday, saying that its operating earnings for the quarter that ended May 31 were up 56.5 percent from the same period of 1990.

The company's net income of $14.9 million, or 36 cents a share, was a pleasant surprise to securities analysts who follow the Hunt Valley-based maker of cooking spices and other products. One analyst, John McMillin of Prudential Securities Inc. in New York, said that he had expected the earnings to be about 30 cents a share.

In the same quarter of last year, the company earned $16.1 million, or 38 cents a share. But more than $6 million, or 15 cents a share, came from a one-time sale of property in the United Kingdom, so operating income was only 23 cents a share.

McCormick's stock closed up $1 at $40.75 a share yesterday, indicating that the company's results were better than Wall Street expected.

David Leibowitz, an analyst with American Securities Corp. in New York, said that the company is still seeing the benefits from its late-1980s restructuring, which is letting the company boost its profits faster than it boosts its sales.

"This is just the latest manifestation of it," Mr. Leibowitz said. "The numbers were very powerful."

"They've come in substantially higher than expected for seemingly the nth quarter in a row," Mr. McMillin said. "They've almost made 50 percent earnings growth the norm, which is scary when you think about it."

The company says that Mr. McMillin needn't worry -- earnings growth will slow down during the second half of its fiscal year, which ends in November. The second half of the year is when the company traditionally makes most of its money, and so it is harder to post very large percentage gains later in the year than it is during the first six months, said James J. Harrison, Jr., the company's chief financial officer.

"We expect 1991 to be a good year," Mr. Harrison said. "We

don't expect [profit gains] to be at the 50 percent level."

The company won't say exactly what it thinks it will earn for the full year. But Mr. Harrison said that McCormick has a stated goal of increasing its earnings 15 percent every year. "We expect to exceed 15 percent earnings growth," he said.

McCormick also announced an increase in its dividen yesterday, boosting its quarterly payout to shareholders to 15 cents a share from 13 cents. Mr. Harrison said the move was made to keep the dividend at about 30 percent of the company's earnings over the course of the full fiscal year.

Yesterday's boost is the seventh time the company has raised its dividend in recent years.

Mr. Harrison acknowledged that the yield on the stock remains at about 1.5 percent, a very modest rate.

He said that's because McCormick is still committed to managing itself as a growth company and thinks it can better enrich shareholders by re-investing dollars rather than paying out more in dividends.

L "We achieve good returns on the dollars we invest," he said.

Three months ended 5/31/91

.. .. .. ..Revenue.. .. .. .. Net.. .. .. .. Share

'91.. .. 332,567,000.. .. 14,942,000.. .. .. 0.36

..301,749,000.. .. 16,061,000.. .. .. 0.38

% change.. +10.2.. .. .. ..-7.0.. .. .. .. . -5.3

Six months ended 5/31/91

.. .. .. ..Revenue.. .. .. .. Net.. ... . .. Share

'91.. ..656,128,000.. .. 30,130,000.. .. .. 0.73

'90.. ..602,297,000.. ..25,966,000.. .. .. 0.61

% change.. . +8.9.. .. .. .. +16.0.. .. .. . +19.7

Note: 1990 figures include one-time gain of $6.3 million, or 15 cents a share, on sale of land in the United Kingdom. Absent gain, 1990 second-quarter net is 23 cents a share and six-month net is 46 cents a share.

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