McCormick & Co., the prominent spices and flavorings company based in Hunt Valley, Md., recently announced its financial results for the fiscal third quarter. While the company experienced a decrease in profit, it saw an increase in revenue. Here’s what you need to know:
Profit
In the quarter ended Aug. 31, McCormick & Co. recorded a profit of $170.1 million, equivalent to 63 cents a share. This is a decrease compared to the same period last year when the company reported a profit of $222.9 million, or 82 cents a share.
Earnings
Adjusting for one-time items, McCormick & Co.’s earnings amounted to 65 cents a share in the third quarter, which aligns with analysts’ expectations based on a survey conducted by FactSet.
Sales
The company’s revenue for the quarter rose to $1.68 billion, surpassing the previous year’s figure of just under $1.6 billion. Despite this increase, McCormick fell slightly short of analysts’ forecasts of $1.7 billion.
Key Insights
China
McCormick’s CEO, Brendan Foley, highlighted the performance of the company’s consumer business in the Asia-Pacific region, particularly in China. He noted that China’s economic recovery from the impact of Covid-19 has been slower than expected.
Price/Volume
Sales growth for McCormick & Co. was primarily driven by an 8% increase in prices. However, this was partially offset by a 2% decline in volume and mix, attributed to China’s slow economic recovery, the divestiture of the Kitchen Basics brand, and the exit from the consumer business in Russia.
Gross Margin
McCormick & Co. managed to expand its gross profit margin during the quarter by 150 basis points through higher prices and cost-saving initiatives. This offset the impact of cost inflation.
Overheads
The company’s selling, general, and administrative expenses increased due to higher employee incentive compensation expenses, as well as distribution and brand marketing costs.
Outlook
McCormick & Co. reaffirmed its guidance for 5% to 7% sales growth for the year, largely driven by higher prices.
