McCormick's price hikes spice up quarterly results despite sluggish demand
MKC•McCormick reported third-quarter sales of $2.02 billion and adjusted profit of 86 cents per share, topping analyst estimates. Prices rose 2.2% year over year as organic volumes fell 0.3%, and the company maintained its annual forecasts.
1. Quarterly results
For the quarter ended August 31, McCormick reported sales of $2.02 billion, compared with analyst estimates of $1.98 billion. Adjusted profit was 86 cents per share, beating estimates of 76 cents. Price increases drove sales growth, while organic volumes dipped 0.3%.
2. Demand pressures
McCormick said higher U.S. gas prices and a cyclospora outbreak pressured demand across foodservice and grocery channels. The outbreak mainly affected fast-food restaurants. Volumes in its Consumer Americas division fell 2.5%, making it the only segment to post a decline.
3. Outlook and merger
The company maintained its annual forecasts for the third time this fiscal year. McCormick said planning for its proposed $65 billion merger with Unilever's foods business was on track and reiterated confidence that the deal would deliver significant earnings-per-share accretion after closing.
