McCORMICK & COMPANY 2007 ANNUAL REPORT
McCORMICK & COMPANY 2007 ANNUAL REPORT |
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| included $1.9 million for discrete tax benefits, primarily the result of new tax legislation enacted in The Netherlands, the UK and the U.S. We expect the tax rate in 2008 to be slightly higher than the 30.5% effective rate in 2007. | In the Americas, consumer business sales increased
5.6%. Together favorable foreign exchange rates and
incremental sales from Simply Asia Foods added 2.6% to
net sales. Pricing on certain items such as pepper and
favorable product mix further increased sales. Higher volumes
of Hispanic items, the expanded organic line, grinders
and seafood items were offset by lower volumes on other
items including pepper, warehouse club products and the
discontinuance of certain underperforming products. In Europe, consumer sales rose 11.4%, of which 9.1% was due to favorable foreign exchange rates. The remaining increase of 2.3% was due primarily to pricing actions and volume increases in the U.K. and France. During 2007, these increases were offset in part by the impact of a competitive situation in The Netherlands and our action to close our business in Finland which both occurred in 2006. Sales in the Asia/Pacific region increased 12.1%, with 8.4% due to favorable foreign exchange rates. Sales in China grew at a double-digit rate due to expanded distribution and marketing support behind our core spice and seasoning products, along with increases in a number of condiments and sauces. Sales growth in China was offset in part by lower sales of our branded spices and herbs in Australia due to the move by a large retailer earlier in 2007 to introduce a private label line of spices and herbs. The increase in operating income excluding restructuring activities was driven by strong sales performance and cost reduction efforts. When comparing operating income margin excluding restructuring activities, higher sales, pricing actions and cost savings from our restructuring program more than offset increases in raw materials and fuel.  The 7.3% sales increase was driven by higher pricing to reflect the increased costs of pepper as well as certain commodities including cheese, soybean oil and flour. |
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Income from unconsolidated operations and minority
interest, combined, increased 21% in 2007 compared to
2006. This increase was driven primarily by the move
from an unprofitable unconsolidated joint venture in Asia
to a licensing agreement in the fourth quarter of 2006, as
well as the performance of our joint venture in Mexico
due to strong mayonnaise sales.
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 Favorable foreign exchange rates added 3.1% to consumer sales in 2007 compared to 2006. The remaining increase of 4.3% was driven by higher pricing, favorable product mix, the acquisition of Simply Asia Foods (acquired in June 2006) which added 1.5% to net sales and volume from brand revitalization, effective marketing programs and new products. |
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McCormick & Company 2007 Annual Report 19 |
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