Chairman's Comments
At McCormick we are committed to providing superior returns to our
shareholders. In the last five years, we have had a strong performance with an
average annual growth rate of 6% for sales and 15% for earnings per share.
Our annual objectives for the next five years are to increase sales 3-7%
and earnings per share 10-12%. Cash flow after capital expenditures and
dividends, is expected to exceed $100 million each year.
This growth will be achieved with a simple recipe that has been the
basis for our success:
Improve margins > Invest in the business > Increase sales and profits
One of the ways we improve margins is by focusing marketing support
and development resources on value-added, higher-margin products. Today,
value-added products account for 65% of sales with the other 35% coming from ingredients. Through Beyond 2000 (B2K), we are creating a global platform for future profit
improvement, more efficient working capital and enhanced relationships with our trading partners.
Supply chain management initiatives will expand our opportunities for margin improvements.
We are investing in our business to drive sales. Research and development expenditures
have nearly doubled in the last five years. A new sensory center, opened in 2002, is one of many
ways we are maintaining our competitive edge in supplying our customers with consumer-preferred
flavors. New products developed in the last three years accounted for 10% of 2002
sales. We are also focused on geographic expansion in Europe and China to increase sales. And
we are pursuing acquisitions of both industrial businesses and consumer brands that will extend
our leadership position in our key markets.
An effective strategy requires great execution. Execution is the result of strong leadership
and talented and enthusiastic employees, both trademarks of McCormick. For over 70
years, we have benefited from our Multiple Management philosophy that inspires
employee participation and recognition. Our core values define who we are and how we
work together. We are committed to a diverse workforce and a spirit of inclusion.
We believe we have a winning strategy for growth, which will lead to the superior financial
performance you have come to expect. I am proud of our Company and have the utmost
confidence in our ability to deliver increased value to McCormick shareholders.
|
|