SPARKS, Md. - McCormick & Co.'s fourth-quarter net income rose nearly 13 percent, buoyed in part by higher prices and strength in emerging markets such as Africa and the Middle East.
But the profit results missed Wall Street expectations, and the spice maker, based in Sparks, Md., issued a forecast that was below analysts' projections because of an increased tax rate and retirement benefit costs. That sent shares tumbling.
McCormick makes an array of spices and other cooking products for consumers, restaurants and food manufacturers. Like many companies in the food sector, McCormick has dealt with rising costs for ingredients as global commodity prices climb.
"Employees throughout McCormick made strong progress in 2012 with our initiatives to grow sales, improve productivity and generate cash," Chairman, President and CEO Alan D. Wilson, chairman said in a statement. "We met our objectives for both sales growth and earnings per share in 2012, despite a challenging economic environment."
Wilson added that he doesn't believe the increased tax rate or retirement benefits costs are "an impediment to achieving our long-term growth outlook in 2014 and beyond."
The spice and flavoring maker earned $148.5 million, or $1.12 per share in the quarter ended Nov. 30. That compares with $131.7 million, or 98 cents per share, a year ago.
Revenue rose 3.1 percent to $1.14 billion from $1.1 billion.
Analysts had expected earnings of $1.17 per share on $1.14 billion in sales.
Consumer sales in the Americas rose slightly from last year, with no impact from currency. In the emerging markets region, consumer sales grew 3 percent, and in local currency increased 9 percent. Exports into the Middle East and Africa contributed to sales growth.
Consumer sales in the Asia/Pacific region increased 32 percent. Excluding the effect of acquisitions and currency exchange, sales increased 7 percent, led by double-digit growth in China.
Many companies have focused on emerging markets for sales growth as the U.S. economy treads water.
The company said that for 2013, it expects sales to rise 3 percent to 5 percent in local currency, due primarily to higher volume and better product mix this year. But it projected earnings per share of $3.15 to $3.23 for 2013.
Analysts had expected $3.35 per share, according to FactSet.
Shares fell nearly 8 percent, or $5.19, to $61.40 in midday trading. The stock has traded between $49.87 and $66.95 over the past 52 weeks.
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