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May 31, 2021
McCormick Q2 2021 Earnings Report
McCormick reported strong second quarter sales growth and increased 2021 financial outlook.
Key Takeaways
McCormick & Company reported an 11% sales increase in the second quarter, driven by growth in the Flavor Solutions segment and the acquisitions of Cholula and FONA. The company increased its financial outlook for sales, adjusted operating income, and adjusted earnings per share for fiscal year 2021.
Sales rose 11% in the second quarter from the year-ago period.
Operating income was $237 million in the second quarter compared to $257 million in the year-ago period.
Earnings per share was $0.68 in the second quarter as compared to $0.73 in the year-ago period.
McCormick increased its sales outlook to expected growth of 11% to 13%, or 8% to 10% in constant currency and also raised its operating profit and earnings per share growth outlook for fiscal year 2021.
McCormick
McCormick
McCormick Revenue by Segment
Revenue by Segment
Consumer Revenue
CapyFin.comFlavor Solutions Revenue
CapyFin.com Forward Guidance
McCormick increased its financial outlook for sales, adjusted operating income and adjusted earnings per share based on the Company’s strong year-to-date performance and robust operating momentum.
Positive Outlook
- Company expects to grow sales by 11% to 13% compared to 2020
- McCormick expects to drive organic sales growth in both its Consumer and Flavor Solutions segments in 2021 driven by brand marketing, new products, category management and differentiated customer engagement.
- Sales growth is also expected to include the impact of pricing actions taken to partially offset an anticipated mid-single digit increase in costs
- Adjusted operating income is expected to grow by 10% to 12%, which in constant currency is 8% to 10%.
- Company projects 2021 adjusted earnings per share to be in the range of $3.00 to $3.05.
Challenges Ahead
- Gross profit margin declined 190 basis points versus the year-ago period driven by unfavorable product mix and higher cost inflation
- Consumer segment sales declined 2%, including a 3% favorable impact from currency against a strong comparison of 26% growth in the second quarter of 2020.
- Adjusted earnings per share was driven primarily by a higher adjusted income tax rate.
- Expected growth range includes strong base business growth and acquisition contribution partially offset by a 4% impact from incremental 2021 business transformation and first-half volume driven COVID-19 expenses.
- Reflects strong base business growth and acquisition contribution, partially offset by a 4% impact from incremental 2021 business transformation and COVID-19 expenses and a 4% headwind from an anticipated increase in the projected adjusted effective tax rate to approximately 23%.
Revenue & Expenses
Visualization of income flow from segment revenue to net income