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May 31, 2024
McCormick Q2 2024 Earnings Report
McCormick's second quarter performance reflected a sales decline of 1%, but operating income increased with adjusted earnings per share rising due to tax benefits and strong joint venture performance.
Key Takeaways
McCormick reported a 1% sales decline in the second quarter, driven by volume declines in Flavor Solutions, which offset consumer volume growth. Operating income increased to $234 million, and adjusted earnings per share rose to $0.69, primarily due to tax benefits and strong performance from McCormick de Mexico. The company reaffirmed its fiscal year 2024 outlook.
Sales declined by 1% in the second quarter, with constant currency sales also down 1%.
Operating income increased to $234 million, while adjusted operating income was $236 million.
Earnings per share increased to $0.68, and adjusted earnings per share was $0.69.
McCormick reaffirmed its sales, operating profit, and adjusted earnings per share outlook for fiscal year 2024.
McCormick
McCormick
McCormick Revenue by Segment
McCormick Revenue by Geographic Location
Revenue by Segment
Consumer Revenue
CapyFin.comFlavor Solutions Revenue
CapyFin.comRevenue by Geographic Location
Americas Revenue
CapyFin.comEMEA Revenue
CapyFin.comAsia Pacific Revenue
CapyFin.com Forward Guidance
McCormick expects sales to range between (2)% to 0% compared to 2023, or (1)% to 1% on a constant currency basis. Adjusted operating income is expected to increase 3% to 5%, or in constant currency 4% to 6%. Adjusted earnings per share are projected to be in the range of $2.80 to $2.85, representing an increase of 4% to 6%, or 5% to 7% in constant currency.
Positive Outlook
- Favorable impact from prior year's pricing actions.
- Improvement in volume trends expected as the year progresses.
- Return to volume growth anticipated, absent any new macroeconomic headwinds.
- Operating income expected to grow by 8% to 10% from $963 million in 2023.
- Strong cash flow expected, driven by profit and working capital initiatives.
Challenges Ahead
- Currency rates are expected to unfavorably impact sales, adjusted operating income and adjusted earnings per share by approximately 1%.
- Strategic decisions in 2023 to discontinue low margin business and divest a small canning business will impact volume growth in 2024.
- Approximately $15 million of special charges in 2024 that relate to previous organizational and streamlining actions are anticipated.
- Significant increase in brand marketing investments will partially offset gross margin expansion.
- Sales to range between (2)% to 0% compared to 2023.
Revenue & Expenses
Visualization of income flow from segment revenue to net income