Spices and sauces giant McCormick & Co. said today (26 September) its annual underlying operating profit could come in lower than it had expected as it increases spending on marketing its brands.
The US company said its adjusted operating income for the year to the end of November is projected to grow 3-5% – compared to a previous forecast of 5-7%.
The owner of brands including Schwartz and Ducros said its upping its “support” for brand marketing by US$13m – with $10m of that planned in the fourth quarter.
McCormick expects a slightly lower tax rate in the fourth quarter but these factors combine mean it now expects adjusted earnings per share to be at the lower end of its $3.13 to $3.19 forecast.
Annual sales, the company added, are now expected to grow “at the lower end” of its forecast of growth of 4-6%.
The revised forecasts came as McCormick reported flat third-quarter net earnings, although higher operating profit and net sales.
Revenue, however, did miss Wall Street forecasts. It was up 4%, primarily thanks to May’s acquisition of WAPC. Nevertheless, McCormick cited “soft consumer demand” in the US and lower industrial sales across the Americas, hit by a fall in demand from quick service restaurants.
