High volume and product mix spice up McCormick's Q2
SPARKS, Md. — McCormick & Company reported sales and profit results for the second quarter ended May 31, at which time the company completed its acquisition of Wuhan Asia Pacific Condiments, a leading bouillon manufacturer in central China.
McCormick's second quarter sales rose 2% to $1 billion from $984 million, and in local currency the increase was 3% when compared to the year-ago period. Higher volume and product mix for the consumer business drove much of this increase, and was the result of product innovation, effective brand marketing support and distribution gains.
Net sales for industrial business declined 1% to $411.6 million from $415.2 million in the year-ago period, and in local currency rose slightly from the year-ago period, due largely to lower demand from quick service restaurants in the Americas and in China. The company anticipates that sales and profit pressure on the industrial business will continue into the third quarter and then improve in the fourth quarter of 2013.
"In the second quarter of 2013, we grew sales for our consumer business 5% in local currency, led by product innovation, brand marketing support and distribution gains,” said chairman, president and CEO Alan D. Wilson. “We are getting good returns on our investments to grow this business and we plan to increase our investment in marketing support approximately $15 million in the second half of the year. Our industrial business grew sales to food manufacturers and food service distributors in the second quarter. While we had lower demand from quick service restaurants in North America and China, we expect this situation to improve in the fourth quarter based on our new product pipeline and latest outlook.
The integration of WAPC, the company’s first acquisition in China, is well underway and McCormick expects business to increase sales in the market by approximately 60%.