McCormick & Co. will report its fiscal second-quarter earnings Wednesday and industry analysts expect a strong showing from the global spice and seasoning company.
Consensus from analysts who follow the company expect it to announce earnings of $0.68 per share and revenue of $1.03 billion for the quarter, which would represent an increase of 6.25 percent and flat growth, respectively, from this period last year.
Its report last quarter was a surprise for investors, with earnings of $0.70 per share beating the consensus prediction of $0.64 per share. The $0.70 mark was an increase of $0.02 from the same quarter in the previous fiscal year.
That improvement over the consensus prediction marked the fourth straight quarter in which the company posted positive surprise earnings. However, analysis from Zacks Investment Research does not foresee McCormick continuing that streak and beating earnings predictions in this quarter.
Wednesday’s report comes amid a year of change for McCormick, with the company having spent the first six months of the year juggling plans for both growth and cutbacks.
The spice giant has made three large acquisitions this year: McCormick bought Drogheria & Alimentari in February and Brand Aromatics in March, and last week, it announced the acquisition of One World Foods, Inc., the seller of Stubb’s barbecue sauces, for $100 million.
The sale of Stubb’s is expected to be completed by late July, pending regulatory approval. McCormick has said it doesn’t expect its acquisitions to affect earnings this year, but Zacks’ analysts expect to see their positive impact in the impending revenue report.
The acquisitions have been consistent with the company’s profile with Brand Aromatics, a supplier of natural flavors, marinades and broth and stock concentrates, adding to McCormick’s domestic production and D&A, an Italian spice and seasoning company that exports to 60 countries, complementing McCormick’s existing European branding.
At the same time that it expands through acquisitions, though, McCormick just finished a round of work force reductions as part of a cost-saving initiative. Last year, the company saved $65 million through its Comprehensive Continuous Improvement program, which started in 2009, and leadership set a goal of $85 million in savings for this year.
Beginning in February, the company offered some employees, who met unspecified criteria, a voluntary retirement package with “enhanced benefits.” Approximately 5 percent of McCormick’s U.S. work force took the offer, with the majority coming from the Baltimore area, commensurate with the two-thirds proportion of the U.S. work force that works in the region.
It wasn’t all bad news for local employees, though, as McCormick announced it was keeping its headquarters in Baltimore County. Despite speculation that the Sparks-based company might move outside the state, it announced in late April that it would be moving just two miles to Hunt Valley, where it plans to build a state-of-the-art campus by mid-2018.