McCormick & Co. has trimmed its profit outlook amid “rising commodity costs and incremental tariffs”.
While the spices, seasonings and hot sauces maker maintained revenue projections for fiscal 2025, expected growth rates for operating profit and earnings per share were lowered from the previous guidance.
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Reporting third-quarter results today (7 October) for the three months through August, US-based McCormick said full-year operating profit is now likely to grow 1-3% on a reported basis versus 2-4% previously.
In adjusted terms, the new estimate is for operating income to deliver 2-4% growth on a reported basis, compared to the prior 3-5% bet.
Constant currency operating profit was adjusted to 3-5% from 4-6%.
Chairman, president and CEO Brendan Foley said: “Amid rising inflation from higher commodity costs and tariffs, we continue to invest in our growth plans, supported by our cost-savings initiatives, which strengthen our resilience and differentiated fundamentals.
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By GlobalData“Our year-to-date performance, combined with our growth plans, reinforce our confidence in achieving our updated outlook for 2025.”
Sales revenue guidance was left at zero to 2% reported growth and kept at 1-3% in constant-currency terms.
However, EPS was guided lower. McCormick expects an end share value of $2.95-3.00 (1-3% growth), compared to $2.98-3.03 (2-4%), previously.
McCormick said third-quarter results were led by volume growth of 1.2%.
Sales rose 3% to $1.7bn and 2% organically, with a 1% contribution from pricing.
For McCormick’s consumer retail business, sales increased 4% to $973m, including a 1% favourable impact from currency. Organic sales climbed 3%.
Flavour solutions, or foodservice, posted a 1% increase to $752m on both a reported and organic basis.
Operating income was little changed in the quarter at $289m versus $287m a year earlier. Adjusted operating income increased 2% to $294m.
McCormick said EPS was relatively flat at $0.84 from $0.83.
Looking ahead to the remainder of the year, McCormick said its new guidance “continues to reflect the company’s prioritised investments in key categories to sustain strong volume trends and drive long-term profitable growth, while appreciating the current uncertainty of the consumer and macro environment”.
The outlook “reflects mitigation plans related to tariffs which are currently in place and have increased since 1 August”.
It added those actions include: “sourcing plans supported by advanced analytics, cost-savings initiatives, and revenue growth management”.
