By Holden Wilen
June 25, 2020
McCormick & Co. Inc. saw its profit and sales increase above Wall Street expectations in the second quarter, driven by increased demand for its spices and seasonings by consumers stuck cooking at home due to Covid-19.
The Hunt Valley-based spice maker on June 25 reported a profit of $195.9 million, or $1.46 per share, during the second quarter, up 31% from $149.4 million, or $1.12 per share, in the year-ago period. On an adjusted basis, McCormick’s profit rose 27.8% to $197.9 million, or $1.46 per share.
Analysts polled by the Thomson Financial Network projected earnings of $1.12 per share. As a result, McCormick (NYSE: MKC) shares increased 1.6% in pre-market trading to $175.
Sales during the three months ending May 31 grew 8% to $1.4 billion, compared to $1.3 billion in the prior-year period. Adjusted for currency exchange rates, McCormick’s sales increased 10%.
Strength in consumer demand drove the increase. McCormick’s consumer sales segment saw sales skyrocket 26% to $962.6 million in the second quarter, compared to $764.1 million in the year-ago quarter as shoppers flooded grocery stores to stock up their pantries. In constant currency, sales increased 28%, driven by a shift to cooking more at home in the Americas and in Europe, the Middle East and Africa.
Consumer sales in the Americas rose 36% compared to the second quarter of 2019, with minimal impact from currency. McCormick said the increase was “broad based with significant growth” across its product portfolio. In Europe, the Middle East and Africa, sales increased 22%.
The increases in consumer sales continued a trend McCormick began seeing during the first quarter. At the time, CEO Lawrence Kurzius said McCormick was experiencing an “unprecedented surge in demand” that he predicted would lead to continued increases in sales.
Looking ahead, McCormick believes there will be a shift in demand due to Covid-19 for the balance of the year, but the company cannot predict the level of consumption at home or away from home, or the impact of possible resurgences of the novel coronavirus.
Consumer sales are expected to continue increasing, and McCormick expects the flavor solutions segment to start turning around as restaurant and other foodservice customers reopen.
To read the complete story, visit the Baltimore Business Journal website.
Source: Baltimore Business Journal.
- McCormick and Drew Barrymore partner for #TacosTogether and $1M donation
- McCormick & Co. commits more than $1M to support food banks