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Nov 30, 2023
McCormick Q4 2023 Earnings Report
McCormick's Q4 2023 financial results were reported, showing increased sales and earnings per share compared to the year-ago period, with growth driven by pricing actions and cost savings.
Key Takeaways
McCormick reported a 3% increase in sales for the fourth quarter, with a 2% increase in constant currency. Earnings per share rose to $0.81, and adjusted earnings per share reached $0.85. The company's performance reflected pricing actions offsetting volume declines, and gross profit margin expanded due to favorable product mix and cost savings.
Sales increased by 3% compared to the year-ago period, with constant currency sales growth of 2%.
Earnings per share (EPS) was $0.81, while adjusted EPS was $0.85, exceeding the prior year's figures.
Gross profit margin expanded by 320 basis points due to favorable product mix, cost savings, and pricing actions.
Operating income reached $297 million, with adjusted operating income at $311 million, reflecting an 11% increase in constant currency.
McCormick
McCormick
McCormick Revenue by Segment
Revenue by Segment
Consumer Revenue
CapyFin.comFlavor Solutions Revenue
CapyFin.com Forward Guidance
McCormick's 2024 outlook reflects the Company's commitment to strengthen volume trends and prioritize investments to drive profitable results and return to differentiated volume-led growth as the year progresses.
Positive Outlook
- The Company expects a favorable impact from the prior year's pricing actions.
- Through the power of its brands and its targeted investments, the Company expects to improve volume trends as the year progresses and return to volume growth, notwithstanding any new macroeconomic headwinds.
- Operating income in 2024 is expected to grow by 8% to 10% from $963 million in 2023.
- Adjusted operating income is expected to increase 3% to 5%, or in constant currency 4% to 6%, driven by gross margin expansion partially offset by a significant increase in brand marketing investments.
- McCormick projects 2024 earnings per share to be in the range of $2.76 to $2.81, compared to $2.52 of earnings per share in 2023.
Challenges Ahead
- Currency rates are expected to unfavorably impact sales, adjusted operating income and adjusted earnings per share by approximately 1%.
- In 2024, McCormick expects sales to range between (2)% to 0% compared to 2023, or (1)% to 1% on a constant currency basis.
- The Company's strategic decisions in 2023 to discontinue low margin business and divest a small canning business will impact volume growth in 2024.
- The Company anticipates approximately $15 million of special charges in 2024 that relate to previous organizational and streamlining actions.
- Excluding these impacts, the Company projects 2024 adjusted earnings per share to be in the range of $2.80 to $2.85, compared to $2.70 of adjusted earnings per share in 2023, which represents an expected increase of 4% to 6%, or in constant currency 5% to 7%.
Revenue & Expenses
Visualization of income flow from segment revenue to net income