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Feb 29, 2020
McCormick Q1 2020 Earnings Report
McCormick's first quarter performance was impacted by COVID-19 outbreak in China, offsetting solid sales and operating income growth.
Key Takeaways
McCormick reported a 2% sales decrease in the first quarter, with a significant impact from the COVID-19 outbreak in China. Operating income also declined by 2%, while earnings per share was $1.08, down from $1.11 in the year-ago period. The company has withdrawn its fiscal year 2020 guidance due to the uncertainty of the pandemic's impact.
Sales declined 2% due to COVID-19 impact in China.
Operating income decreased to $194 million.
Earnings per share was $1.08, a decrease from $1.11 in the prior year.
Fiscal year 2020 guidance was withdrawn due to COVID-19 uncertainty.
McCormick
McCormick
McCormick Revenue by Segment
Revenue by Segment
Consumer Revenue
CapyFin.comFlavor Solutions Revenue
CapyFin.com Forward Guidance
McCormick withdrew its fiscal 2020 guidance due to the uncertainty of the duration and extent of the COVID-19 pandemic impact. The company believes there will be a shift in consumer demand due to COVID-19 but cannot predict the duration and extent of the impact.
Positive Outlook
- Expecting an overall increase in consumer demand during periods of pantry stocking.
- Expecting increased cooking at home.
- Expecting increased customer demand from packaged food companies.
- Reaffirms long-term financial objectives.
- Reaffirms capital allocation priorities.
Challenges Ahead
- Withdrawing its fiscal 2020 guidance due to the uncertainty of the duration and extent of the COVID-19 pandemic impact.
- Cannot predict the duration and extent of the impact of COVID-19.
- Expecting declines in demand from restaurant and other foodservice customers.
- Believes it cannot extrapolate the overall impact for the rest of the company due to differences related to lockdown durations and pantry stocking as well as the differing percentages of foodservice business and other dynamics in each region.
- Has decided to moderate the pace of its business transformation investments and has delayed its ERP system replacement program.
Revenue & Expenses
Visualization of income flow from segment revenue to net income