McCormick Q2 2024 Earnings Report
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.
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McCormick Revenue by Segment
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