Key Takeaways
McCormick & Co. reported fiscal Q2 adjusted EPS of $0.80, beating the $0.69 consensus, as sales rose 17%.
"Second quarter results demonstrate the continued strength and resilience of our business in a dynamic operating environment," Brendan M. Foley, chairman, president and chief executive officer, said.
Net sales reached $1.94 billion, up 17% from a year earlier, including a 12% contribution from the McCormick de Mexico acquisition and a 3% favorable currency impact. Organic sales grew 1.7%, driven by price. Adjusted operating income rose 30% to $336 million, with gross margin expanding 270 basis points to 40.2%. The IEEPA tariff refund contributed about 140 basis points of that expansion.
The Consumer segment posted net sales of $1.14 billion, up 23%, while Flavor Solutions generated $794 million, up 9%. On an organic basis, Consumer sales rose 0.8% as a 3% price increase was partly offset by a 2% volume decline. Flavor Solutions organic sales grew 2.9%, supported by gains across both volume and price.
On a GAAP basis, earnings per share came in at $0.56, down from $0.65 a year ago, weighed down by $0.24 in special charges tied to transaction and integration costs related to the Unilever Foods combination and the McCormick de Mexico acquisition.
For fiscal 2026, McCormick reaffirmed its outlook for net sales growth of 13% to 17%, adjusted operating income growth of 16% to 20%, and adjusted EPS of $3.05 to $3.13, implying 2% to 5% growth. The company expects organic sales growth of 1% to 3% for the full year.
The planned combination with Unilever's food business, announced in March, would create a flavor-focused company with roughly $20 billion in annual revenue and a 21% operating margin. McCormick expects the deal to deliver mid- to high-single-digit adjusted EPS accretion within the first 12 months after closing and mid- to high-teens accretion by year three. Integration planning is underway, with a secondary listing location on a European exchange expected by the end of July.
McCormick also declared a quarterly dividend of $0.48 per share, marking 102 consecutive years of dividend payments. The stock carries a "Moderate Buy" rating from analysts, with seven of 13 assigning a "Strong Buy" and six rating it a "Hold." The mean price target of $75.92 implies potential upside of about 34% from current levels.
The guidance reaffirmation signals management expects demand trends to hold through the second half of the year. Investors will watch for further details on the Unilever Foods integration timeline and operating model, expected by the end of September.
This article is for informational purposes only and does not constitute investment advice.
