McCormick & Company, Incorporated (NYSE: MKC) stock rose 3.64% on June 25th, 2020 and continued its bullish momentum on June 26th, 2020 rising over 1.6% (As of 11:58 am GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter of FY 20. The cash flow provided from operations was $356 million through the second quarter of 2020, which represents a 13% increase compared to $314 million in the first half of 2019, and was driven by higher net income.
MKC in the second quarter of FY 20 has reported the adjusted earnings per share of $1.47, beating the analysts’ estimates for the adjusted earnings per share of $1.16, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 10 percent to $1.40 billion in the second quarter of FY 20, beating the analysts’ estimates for revenue by 1.47%. The adjusted operating income grew 21%, including a 2% unfavorable impact from currency and adjusted operating margin expanded by 210 basis points. These results were mainly driven by higher sales, favorable mix and savings from the comprehensive continuous improvement program, or CCI.
Moreover, the consumer segment sales rose 28% in constant currency, due to the Americas and EMBA region. The shift to at home consumption and cooking more at home has led to substantial demand for the consumer products. The consumer segment sales in the Americas increased 36% in constant currency versus the second quarter of 2019. The increase was due to significant growth across the McCormick branded portfolio, both in major channels and e-commerce as well as in private label products. In EMEA, constant currency consumer sales rose 26% from a year ago & Consumer sales in Asia-Pacific declined 13% in constant currency. The flavor solutions segment second quarter constant currency sales fell 16%, due to declines in the away-from-home products in the portfolio across all regions. In the flavor solutions segment, the company expects the demand from the packaged food customers to return to the pre-COVID-19 levels, with continued variability by customer.
Additionally, the company returned $165 million of cash to shareholders through dividends and used $87 million for capital expenditures this period.
In April, the company had raised $500 million through the issuance of a 10-year bond, with a 2.5% interest rate. The company continues to expect mid-single digit inflationary pressures, CCI savings of approximately $105 million and a mid-single digit increase in brand marketing investment.