Earnings miss, revenue in line
Business performance
In Q1, MKC’s Consumer segment generated sales of $919 million, which was relatively flat versus the year-ago quarter. Organic sales grew 1%, driven by a 3% increase in volume, partly offset by a 2% drop in pricing. This segment benefited from volume growth across all regions.
Within this segment, spices and seasonings saw strong volume growth in all regions while hot sauce recorded positive gains in the US. The company significantly expanded its distribution points in core categories in the Americas and Europe, Middle East, and Africa (EMEA) regions while the China business is gradually recovering.
Sales in the Flavor Solutions segment increased 1% to $686 million. Organic sales grew 3%, driven by a 2% increase in volume and product mix and a 1% gain from pricing. This segment benefited from share gains in alcoholic and non-alcoholic beverages and snack bars, and from volume growth with QSR customers in the Americas and Asia-Pacific (APAC) regions. However, its performance was pressured by volume softness from CPG customers in the Americas and EMEA, and QSR customers in EMEA.
McCormick’s gross margin expanded by 20 basis points to 37.6% in the first quarter of 2025, mainly driven by cost savings generated by the Comprehensive Continuous Improvement (CCI) program.
Reaffirms outlook
McCormick reaffirmed its outlook for fiscal year 2025. The company expects net sales to grow 0-2% on a reported basis. Organic sales are expected to grow 1-3%. The top line growth is expected to be driven by volume-led growth across both segments and a gradual improvement in the China Consumer business. GAAP EPS is projected to grow 2-4% to $2.99-3.04 while adjusted EPS is expected to increase 3-5% to $3.03-3.08.