MCCORMICK & CO /SH NV (NYSE: MKC) stock fell over 1% on 1st April, 2020 (as of 10:51 am GMT-4; Source: Google finance) after the company posted mixed results for the first quarter of FY 20. The sales and profit fell during the firm’s first quarter as China (a key market) dealt with COVID-19, but while restaurants are shuttering and scaling back services in other regions the Hunt Valley spice maker’s consumer sales are surging as more people stock up to make food at home. The company has withdrawn its 2020 guidance to assess the present scenario for a better idea of what the rest of the year looks like.
Meanwhile, to help keep facilities running, the company is offering the workers at physical locations, an increased hourly pay, extended the paid leave to care for sick family members and would maintain salaries if operations are suspended. In the U.S., on-site workers will receive an additional $2.00 an hour. An additional 5 sick days at full pay to care for family members were added along with 11 weeks of two-thirds pay.
MKC in the first quarter of FY 20 has reported the adjusted earnings per share of $1.08, beating the analysts’ estimates for the adjusted earnings per share of $1.04. The company had reported 2% fall in the adjusted revenue to $1,212,000,000 in the first quarter of FY 20, missing the analysts’ estimates for revenue of $1,230,000,000. The impact of the COVID-19 outbreak in China has led to the reduction in the company’s sales growth by 3% as compared to the first quarter of last year. In the Americas and Europe, Middle East and Africa (EMEA) regions, the company grew sales on the back of new products and growth in the base business through brand marketing support, expanded distribution, and pricing actions with a partial offset from the impact of trade inventory reductions at retailers. Gross profit margin expanded by 90 basis points versus the year-ago period, which is due to the cost savings led by the Comprehensive Continuous Improvement (CCI) program. Operating income fell 2% to $194 million in the first quarter of 2020 compared to $197 million in the year-ago period.
Moreover, during the first quarter, the consumer segment sales fell 6% when compared to the first quarter of 2019, which was mainly driven by the Asia/Pacific region. Flavor solutions segment sales rose 5% compared to the first quarter of 2019, due to strong growth in the Americas and EMEA.