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May 31, 2023
McCormick Q2 2023 Earnings Report
McCormick reported strong second quarter performance and raised fiscal 2023 profit outlook.
Key Takeaways
McCormick & Company reported an 8% increase in sales, with a 10% increase in constant currency. Operating income increased to $222 million, and adjusted operating income rose by 35% to $235 million. Earnings per share was $0.56, with adjusted earnings per share increasing by 25% to $0.60. The company reaffirmed its sales outlook and raised its adjusted operating income and adjusted earnings per share outlook for fiscal year 2023.
Sales increased 8% in the second quarter, or 10% in constant currency, driven by strong results in the Consumer and Flavor Solutions segments.
Operating income was $222 million, while adjusted operating income increased 35% to $235 million.
Earnings per share was $0.56, with adjusted earnings per share increasing 25% to $0.60.
McCormick reaffirmed its sales outlook and raised its adjusted operating income and adjusted earnings per share outlook for fiscal year 2023.
McCormick
McCormick
McCormick Revenue by Segment
Revenue by Segment
Consumer Revenue
CapyFin.comFlavor Solutions Revenue
CapyFin.com Forward Guidance
For fiscal year 2023, McCormick reaffirmed its sales outlook and raised its operating income and adjusted earnings per share outlook, driven by the strength of its year-to-date performance.
Positive Outlook
- Strong underlying business performance in 2023 driven by sales growth.
- Favorable impact to operating income from its GOE program.
- Lapping of the negative impact of the COVID-related disruptions in China in 2022.
- Sales growth to be driven primarily by pricing actions which, in conjunction with cost savings, are expected to offset inflationary pressures.
- Continued growth through the strength of its brands, as well as brand marketing, new products, category management, and differentiated customer engagement plans.
Challenges Ahead
- An expected increase in employee incentive compensation expenses given the anticipated improvement in underlying business performance.
- Earnings per share growth will be tempered by higher interest expense.
- A higher projected effective tax rate compared to 2022 will temper EPS growth.
- Company anticipates approximately $55 million of special charges in 2023 that relate to previously announced organizational and streamlining actions.
- Year-over-year expected increase of 3% to 5% reflects strong operating performance, partially offset by an 8% headwind from higher interest expense due to the higher interest-rate environment and lapping the impact of an optimization of the Company’s debt portfolio last year, as well as a 1% headwind from an anticipated increase in the Company's projected adjusted effective tax rate.
Revenue & Expenses
Visualization of income flow from segment revenue to net income