McCormick Reports Strong Q2-2020 Profit Growth

Hunt Valley / MD. (mcc) McCormick + Company Inc., a global leader in flavour, reported financial results for the second quarter ended May 31, 2020.

  • Sales rose 8 percent in the second quarter from the year-ago period. In constant currency, the company grew sales 10 percent with significant consumer segment growth partially offset by a substantial sales decline in the flavor solutions segment.
  • Operating income was USD 257 million in the second quarter compared to USD 208 million in the year-ago period, an increase of 24 percent. Adjusted operating income was USD 260 million, an increase of 21 percent from USD 215 million in the second quarter of 2019, and a 23 percent increase in constant currency.
  • Earnings per share was USD 1.46 in the second quarter as compared to USD 1.12 in the year-ago period. Adjusted earnings per share rose 27 percent to USD 1.47 from USD 1.16 in the year-ago period.
  • The company reaffirms its long-term financial objectives and capital allocation priorities.

Chairman, President and CEO’s Remarks

Lawrence E. Kurzius, Chairman, President and CEO, stated, «Our second quarter played out under extraordinary circumstances in all our markets. I am incredibly proud of the way McCormick has performed in an unprecedented operating environment. Our results speak to the value of our products and to our capabilities as a company. The recovery from COVID-19 continues to evolve daily and while conditions remain uncertain, we remain committed to ensuring the health and safety of our employees, maintaining the quality and integrity of our products and keeping our brands and our customers’ brands in supply. We plan to emerge strong from this by focusing on the long-term goals, strategies and values that have made us so successful.

«Our results for the second quarter were significantly impacted by a shift in consumer demand resulting from the COVID-19 pandemic. Our exceptional consumer segment growth was driven by the substantial increase in demand as consumers were cooking more at home. In our flavor solutions segment, our results were significantly impacted by sharp declines in demand from restaurant and other foodservice customers as away from home dining was significantly curtailed. Taken together, these impacts demonstrate the strength and diversity of our offering.

«Our ability to meet the increased consumer demand and execute during a volatile quarter highlights our agility and strong foundation. The sustained level of consumer demand has put pressure on our supply chain and I want to thank our employees for their dedicated efforts as well as our suppliers and customers for their partnerships in this challenging environment. Our results were driven by the engagement of our employees and the successful execution of our strategies. We delivered strong sales growth, double digit operating profit and earnings per share growth, as well as operating margin expansion and strong cash flow.

«McCormick is a global leader in flavor. We are differentiated with a broad and advantaged global flavor portfolio which continues to drive growth and position us to fully meet the demand for flavor around the world. We deliver flavor across all markets and through all channels, while responding readily to changes in the ever-evolving food and beverage industry, as well as in the global environment, with new ideas, innovation and purpose. We are continuing to capitalize on the global and growing consumer interests in healthy, flavorful cooking, heritage brands and digital engagement. These long-term trends have not only remained intact during this crisis, they have accelerated. Our focus on long-term sustainable growth and strengthening our organization is the foundation of our future. The long-term fundamentals of our business remain intact, and given our consistent history of growth, we are confident that we can successfully navigate through the current volatility and continue on our long-term growth trajectory.

«I want to recognize McCormick employees around the world as the collective power of our people drives our momentum and our success. With our vision to stand together for flavor and our relentless focus on growth, performance, and people, we are confident our strategies will enable us to become even better positioned to drive future growth and build long-term value for our shareholders.»