McCormick Q4 2022 Earnings Report
Key Takeaways
McCormick's Q4 2022 sales declined by 2% compared to the previous year, but increased by 2% in constant currency. Earnings per share (EPS) was $0.69, and adjusted EPS was $0.73. The company faced challenges including high cost inflation, supply chain disruptions, and COVID-related issues in China, which impacted sales and operating income.
Reported sales declined 2%, but constant currency sales grew 2%, within the implied fiscal year 2022 guidance range.
COVID-related disruptions in China unfavorably impacted sales growth by approximately 2%.
Consumer segment saw strength in consumption trends, particularly in the U.S. where fourth quarter total branded consumption grew 6%.
Flavor Solutions segment experienced outstanding sales growth with continued momentum across all regions.
McCormick
McCormick
McCormick Revenue by Segment
Forward Guidance
McCormick expects to grow sales by 5% to 7% in 2023, driven primarily by pricing actions and cost savings to offset inflationary pressures. Operating income is expected to grow by 10% to 12%.
Positive Outlook
- Strong underlying business performance driven by sales growth
- Favorable impact to operating income from Global Operating Effectiveness Program
- Lapping of the negative impact of COVID-related disruptions in China in 2022
- Sales growth driven by pricing actions
- Continued growth through brand strength, marketing, new products, and customer engagement
Challenges Ahead
- Partially offset by the Kitchen Basics divestiture
- Expected increase in employee incentive compensation expenses
- Earnings per share growth tempered by higher interest expense
- Higher projected effective tax rate compared to 2022
- Approximately $50 million of special charges in 2023 related to previous organizational and streamlining actions
Revenue & Expenses
Visualization of income flow from segment revenue to net income