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NEW YORK (
McCormick &(MKC ) closed 2% lower Thursday after an Asian acquisition threw off earning reports. McCormick shares slipped 1.44 points to $70.59.
The seasoning and condiment company reported adjusted 2nd quarter net income Thursday morning. Income had fallen 2 cents short of expectations; consensus had estimates at $0.61. MKC lowered its earnings per share guidance for this fiscal year to the $3.13-$3.19 range from a range of $3.15-$3.23.
Shortcomings have been blamed on McCormick's $147 million acquisition of Wuhan Asia-Pacific Condiments Co. Ltd. The privately owned Chinese company creates soup broths. The company was purchased to give McCormick a foothold in Central China and add flavors to its collection.
However, 2nd quarter sales grew by 2%. WAPC is expected to help sales grow by another 4% to 6%. "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," said Chairman Alan D. Wilson in a statement. WAPC is the company's first Chinese acquisition.
Key Banc analysts believe that upcoming costs such as lower operating income, acquisition costs, increasing brand marketing expenses and lower quick service restaurant demands will create a "$16 million drag." The team led by Akshay S. Jagdale stated "we believe that performance in MKC's base business is expected to be than the Company's previous estimates." Deutsche Bank holds McCormick & Company at a buy rating.
Written by Robert Arenella in New York