McCormick: Reports Q1-2023 Results, Reaffirms Outlook

Hunt Valley / MD. (mcc) McCormick + Company Inc., a global leader in flavour, reported financial results for the first quarter ended February 28, 2023 and reaffirmed its financial outlook for fiscal year 2023.

  • Sales increased 3 percent in the first quarter from the year-ago period. In constant currency, sales increased 5 percent. Both comparisons include a 2 percent unfavorable impact from the Company’s Kitchen Basics divestiture, the exit of the Company’s Consumer business in Russia, and lower China consumption due to Covid-related disruption.
  • Operating income was USD 199 million in the first quarter compared to USD 207 million in the year-ago period. Adjusted operating income of USD 227 million was comparable to the first quarter of 2022. In constant currency, adjusted operating income increased 2 percent from the year-ago period.
  • Earnings per share was USD 0.52 in the first quarter as compared to USD 0.57 in the year-ago period. Adjusted earnings per share was USD 0.59 as compared to USD 0.63 in the year-ago period.
  • For fiscal year 2023, McCormick reaffirmed its sales, operating income, and earnings per share outlook.

Chairman and CEO’s Remarks

Lawrence E. Kurzius, Chairman and CEO, stated, «We delivered solid first quarter results which reflect strong demand and early results from our actions to increase our profit realization in 2023. Our first quarter record sales performance reflects the strength of our broad global portfolio and the effective execution of our strategies. Our Global Operating Effectiveness (GOE) program is yielding results with first quarter cost savings in line with our expectations. The progress we are making on gross margin improvement reflects the level of urgency with which we are addressing the pressure points from last year. These results, combined with the strong demand we continue to expect across our portfolio and our diligent approach to optimizing our cost structure, bolster our confidence in delivering our 2023 full year outlook.

«In the first quarter, we drove 5 percent constant currency sales growth with strong underlying business performance tempered by the impacts of our Kitchen Basics divestiture, Covid-related disruption in China, and the exit of our Consumer business in Russia. Our Flavor Solutions segment sales growth was outstanding with continued momentum across all three regions. The underlying performance of our Consumer segment, excluding the Kitchen Basics, China, and Russia impacts, reflects strong growth led by the Americas region. Importantly, beginning in the second quarter, as we lap the exit of our Consumer business in Russia and the impact of last year’s Covid-related shutdowns in China, we expect an acceleration of our Consumer segment growth.

«We drove considerable improvement in our gross margin performance in the first quarter, despite experiencing the highest cost inflation we expect for the year as well as continued elevated costs in our Flavor Solutions segment to meet high demand. Our gross margin reflects the continued recovery of the cost inflation our pricing lagged last year as well as cost savings from our CCI and GOE programs. The optimization of our costs through our GOE program is progressing as planned. We expect the impact of our GOE program to scale-up as the year progresses and we remain on track to realize USD 75 million of cost savings in 2023 resulting from our actions to normalize our supply chain costs and to streamline our organization.

«As we look ahead to the balance of the year, we will continue to focus on capitalizing on strong demand, optimizing our cost structure, and positioning McCormick to deliver sustainable growth and long-term shareholder value. We have strong growth plans in place, including building momentum with our new products and heat platform, and are delivering on our commitment to increasing our profit realization. We are confident, with the successful execution of our proven strategies, we will drive profitable growth in 2023.

«I want to recognize McCormick employees around the world as they drive our momentum and success. I want to also thank all our customers, suppliers and investors for their collaboration and patience as we move beyond the unique environment we have been operating in since the onset of the pandemic. The fundamentals that drove our historical financial performance remain strong and we are confident we will continue to not only deliver strong sales growth, but also drive total shareholder return at an industry-leading pace.»

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