McCormicks 4Q15 Earnings Call Notes

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McCormick’s (MKC) CEO Alan Wilson on Q4 2015 Results

New CEO taking over

“I am pleased to be transitioning from my role as CEO at this time. One of my conditions in stepping down was to have the company in great shape with strong financial performance and forward momentum”

We’re still robust on China going forward

“on a go-forward basis, we’re still robust on China. We know there’s a lot of discussion around China. We’re obviously very aware of the economic discussion going on there but our own business we’re anticipating that continues to do well.”

Lawrence Kurzius

Reduce sodium w/spices

“In mid-2015, the USDA first recommended spices and herbs as a way to reduce sodium in the diet in recommendations to school nutritionists and to adults over 65. And in early January, this recommendation made its way into the new 2015-2020 Dietary Guidelines for Americans.”

Much of our business is direct toward smaller cities in China, which have experienced more robust growth

“We’re aware of the macroeconomic pressure around the China market, which does make us cautious, but we’re also quite optimistic about our business in China. A great deal of the carnage that’s happened around us has been more in the modern trade portion of the business. That part of our business is slow as well but it only accounts for about 20% of our consumer business in China. Much more of our business in particular, thanks to the acquisition that we did a couple of years ago is more directed to the interior, to the smaller cities and through a more traditional trade outlet. So, we have continued to experience quite robust growth of our consumer business in China.”

The consumer side of the business in China has really been quite strong to start the year

“I don’t want to comment too much on 2016 but the opening of our year in China on the consumer side of our business has been really quite strong. And I focus my remarks on the consumer side because for us China has really become predominantly a consumer business. Years ago, China was more of an industrial business for us, and that’s how we got our foothold there. But with the continued growth of our consumer business and with the addition of the acquisition we did a couple of years ago, that business is now more [indiscernible] about two-thirds consumer.”

I was just over there and the China team is optimistic

“I was just there with the China team last week and met with the management over there. Actually, Alan and I went over as part of our internal transition communication. And so, it gave us an opportunity to meet firsthand with the China team and they continue to be quite optimistic.”

Trend towards more natural is an important driver for us

“improving the product mix and moving towards flavors and more value-added technically differentiated product is part of the margin equation, and the overall trend in our industry towards more natural, less artificial is an important driver of volume for us because this is an area where we think that we got particular expertise. I think in our remarks, we indicated that about 40% of the briefs that we get from our customers include some wellness aspect “