HUNT VALLEY, MD. — Sales for Cholula Hot Sauce continue to increase as McCormick & Co. focuses on marketing the brand and increasing its presence in e-commerce.
The Hunt Valley-based company achieved net income of $755.3 million, equal to $2.83 per share on the common stock, in the fiscal year ended Nov. 30, 2021, which was up 1.1% from $747.4 million, or $2.80 per share, in the previous fiscal year. Sales rose 13% to $6.32 billion from $5.60 billion. Sales from recent acquisitions Cholula and FONA International, LLC contributed 4% to the increase.
McCormick & Co.’s stock on the New York Stock Exchange was trading at $97.89 per share at midday on Jan. 27 (when the company announced its fiscal year results), which was up more than 6% from a close of $91.94 on Jan. 26.
McCormick & Co. completed its acquisition of Cholula in November 2020.
“We executed on initiatives this past year (2021), including optimizing shelf placement and assortment; expanding into new channels; gaining momentum in e-commerce where Cholula had been under-penetrated; increasing awareness, both through brand marketing investments and brand partnerships such as with DoorDash; and leveraging promotional scale across McCormick brands,” said Lawrence E. Kurzius, president and chief executive officer, in a Jan. 27 earnings call. “We are excited about the results our initiatives are yielding. During 2021, we gained significant momentum on top of lapping elevated growth in 2020, adding over 1 million new households and growing Cholula's consumption 13% in 2021 versus last year.”
McCormick & Co. should meet its synergy targets of $10 million with Cholula in 2022 and $7 million with FONA in 2023, said Michael R. Smith, chief financial officer. McCormick & Co. completed its acquisition of FONA in December 2020.
“The addition of this leading North American flavor manufacturer is accelerating the growth of our global flavors platform,” Mr. Kurzius said. “We are thrilled our first year of owning FONA has been a record year for the business with double-digit sales growth compared to last year.”
Within McCormick’s Consumer segment, sales grew 9% in fiscal 2021 to $3.94 billion from $3.60 billion in the previous year. Brand marketing, digital engagement, new products and Cholula fueled at-home eating, Mr. Kurzius said.
The supply chain situation has improved since 2020.
“Demand has remained high, and we continue to realize the benefit of our US manufacturing capacity expansion, although some products remain stretched by sustained high demand,” Mr. Kurzius said. “Shelf conditions are improving as is our share performance with another sequential improvement in the fourth quarter, as we expected.”
In the Flavor Solutions segment, sales for the fiscal year increased 19% to $2.38 billion from $2 billion. New at-home products, a recovery in away-from-home products, and contributions from FONA and Cholula drove the growth, Mr. Kurzius said.
Companywide in the fourth quarter, net income of $197.4 million, or 74¢ per share on the common stock, was down 1.6% from $200.7 million, or 75¢ per share in the previous year’s fourth quarter. Sales increased 11% to $1.73 billion from $1.56 billion
McCormick & Co. expects sales to increase 3% to 5% in the current fiscal year and projects EPS in a range of $3.07 to $3.12. The company expects inflationary pressure in the “mid-teens,” Mr. Smith said. The company has set a cost-savings target of about $85 million in 2022.
“We have a demonstrated history of managing through short-term pressures and did so again in the fourth quarter, and we expect to do the same through this inflationary environment using pricing and other levers to fully offset cost pressures over time,” Mr. Kurzius said.