HUNT VALLEY, Md. - McCormick (NYSE:MKC) & Company, Incorporated (NYSE:MKC), known for its flavor products, has reported its financial results for the third quarter ending August 31, 2024, while also reaffirming its sales and operating profit outlook for fiscal 2024. The company has seen a steady sales performance, with a 1% volume growth slightly offset by pricing, and has increased its earnings per share outlook.
In the third quarter, McCormick achieved sales comparable to the same period last year, with operating income rising from $245 million to $287 million. Adjusted operating income also saw an increase from $251 million to $288 million. Earnings per share improved to $0.83 from $0.63 in the previous year, with adjusted earnings per share also rising from $0.65 to $0.83.
McCormick's President and CEO, Brendan M. Foley, expressed satisfaction with the company's performance, which he attributed to successful investments and the achievement of global positive volume growth. Despite challenges in China's macro environment, the Consumer segment showed solid volume growth, while the Flavor Solutions segment experienced strong growth in Branded Foodservice.
Foley emphasized the company's focus on growth levers such as brand marketing, new products, category management, and technology, which have contributed to the expansion of gross profit margin by 170 basis points compared to last year. These efforts, combined with cost savings from the Comprehensive Continuous Improvement (CCI) program, have led to an increase in operating income.
The company's fiscal 2024 outlook remains positive, with sales expected to range between a 1% decrease to a 1% increase compared to 2023, and operating income projected to grow by 9% to 11%. McCormick anticipates special charges of approximately $15 million related to organizational and streamlining actions. Adjusted operating income is expected to increase by 4% to 6%, with minimal impact from currency fluctuations.
McCormick plans to host an Investor Day on October 22, 2024, to share its strategic roadmap and long-term objectives. The company expects strong cash flow for the fiscal year and intends to return a significant portion of it to shareholders through dividends.
This news is based on a press release statement, and it reflects the company's current financial health and future projections.
In other recent news, McCormick & Company, a prominent player in the spice and seasonings market, has been the subject of several analyst updates. Citi has raised its price target for McCormick to $88, anticipating better-than-expected organic sales growth and earnings per share for its fiscal third quarter of 2024. This anticipation is driven by a favorable view of the food sector and potential upward revisions to estimates.
Despite a slight decrease in sales during its Q2 earnings call, the company highlighted improved volumes in the Consumer segment and anticipates a 4-6% increase in adjusted earnings per share for the full year. Barclays maintained its Equalweight rating on McCormick shares, citing increased sales of spices and seasonings as a positive sign.
Argus has adjusted its outlook on McCormick, reducing the company's price target to $80 while maintaining a Buy rating. This adjustment reflects expectations that McCormick will overcome recent volume challenges. Conversely, Deutsche Bank reaffirmed its Hold rating on McCormick shares, maintaining a steady price target of $73.00. These recent developments underscore the importance of the upcoming fiscal report and investor event in shaping investor sentiment toward the company.
InvestingPro Insights
McCormick's recent financial results and outlook align well with several key insights from InvestingPro. The company's steady performance and positive projections are reflected in its market position and financial metrics.
According to InvestingPro data, McCormick boasts a substantial market capitalization of $22.11 billion, underlining its significant presence in the flavor products industry. The company's revenue for the last twelve months as of Q2 2024 stood at $6.68 billion, with a modest growth of 2.57% over the same period.
One of the standout InvestingPro Tips is that McCormick "has raised its dividend for 38 consecutive years." This impressive track record of dividend growth aligns with the company's statement about returning a significant portion of cash flow to shareholders through dividends. Additionally, McCormick "has maintained dividend payments for 54 consecutive years," further emphasizing its commitment to shareholder returns.
The company's solid financial performance is also reflected in its profitability. An InvestingPro Tip notes that McCormick has been "profitable over the last twelve months," which is consistent with the positive earnings report and outlook presented in the article.
It's worth noting that McCormick's stock has shown a "strong return over the last three months," with InvestingPro data indicating a 18.36% price total return over that period. This positive momentum could be attributed to the company's steady performance and optimistic future projections.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights, with 11 more tips available for McCormick. These additional tips could provide valuable context for understanding the company's financial health and market position.
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