McCormick & Company Reports Better than Expected Q2 Earnings
Image courtesy of 123rf.com

McCormick & Company Reports Better than Expected Q2 Earnings

McCormick & Company, Incorporated reported a 1% decline in sales for the second quarter of 2024 but beat EPS and revenue expectations.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

McCormick & Company, Incorporated (NYSE: MKC), a global leader in flavor, reported its financial results for the second quarter ended May 31, 2024. The company experienced a slight decline in sales, down 1% from the same period last year.

This decline was consistent in both reported and constant currency terms. The decrease in sales was primarily driven by a 1% volume decline in the Flavor Solutions segment, which more than offset the volume growth in the Consumer segment.

Operating income for the quarter was $234 million, up from $222 million in the previous year. Operating income was $236 million when adjusted for special charges, compared to $235 million last year. Earnings per share (EPS) notably increased, reaching $0.68 compared to $0.56 in the year-ago period. Adjusted EPS was $0.69, up from $0.60, reflecting a positive impact from discrete tax benefits and improved performance from joint ventures, particularly McCormick de Mexico.

McCormick & Company Surpasses EPS, Revenue Expectations in Fiscal Q2

Compared to market expectations, McCormick’s second quarter of 2024 performance exceeded analyst predictions. The expected EPS for the quarter was $0.59, but the company outperformed with an actual EPS of $0.68.

This significant beat can be attributed to higher operating income and favorable tax benefits. The adjusted EPS of $0.69 surpassed the anticipated figure, underscoring the strength of McCormick’s operational efficiency and strategic investments.

Revenue expectations for the quarter were set at $1.63 billion, and McCormick reported actual revenue of $1.643 billion. Although the sales declined by 1% year-over-year, the company met the revenue expectations, indicating a resilient performance amidst challenging market conditions. The slight decline in sales was attributed to strategic divestitures and lower demand in certain segments, which were anticipated by the market.

McCormick & Company Reaffirms Fiscal 2024 Outlook, Expects EPS in the Range of $2.76 to $2.81

McCormick reaffirmed its fiscal 2024 outlook, projecting a continued focus on strengthening volume trends and prioritizing investments to drive profitable growth.

The company expects sales to range between a 2% decline and flat growth compared to 2023 or between a 1% decline and a 1% increase on a constant currency basis. This guidance reflects the anticipated impact of prior pricing actions and strategic decisions made in 2023, including discontinuing low-margin businesses and divestitures.

Operating income for 2024 is expected to grow by 8% to 10%, driven by gross margin expansion and significant investments in brand marketing. The company anticipates adjusted operating income to increase by 3% to 5%, or 4% to 6% on a constant currency basis.

McCormick projects its 2024 EPS to be in the range of $2.76 to $2.81, with adjusted EPS expected to be between $2.80 and $2.85, representing an increase of 4% to 6%, or 5% to 7% on a constant currency basis.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.