Earnings beat, revenue in-line
Strength in Consumer, Pressure in Flavor
In Q2, sales in the Consumer segment grew 3% on both a reported and organic basis, driven by volume growth and product mix. Sales grew across all geographic regions, with the highest growth of 4.9% in EMEA, followed by APAC and Americas at 2.9% and 2.4% respectively. The segment benefited from strong volume growth in spices and seasonings across all regions. The hot sauce category also performed well with share and distribution gains.
Sales in the Flavor Solutions segment decreased 1.3% in Q2 on a reported basis while organic sales remained flat YoY. Sales declined 1% in the Americas and 4.7% in EMEA while the APAC region recorded sales growth of 3.1%.
While the segment benefited from new customer wins and share gains in the Americas, it faced pressure from softness in CPG customers’ volumes in that region and in EMEA. A slowdown in foodservice foot traffic impacted branded foodservice performance in the Americas. Although MKC saw strong volume growth with quick service restaurants, or QSR, customers in the Americas and APAC, it faced pressures on the same in EMEA.
Reaffirmed outlook
McCormick reaffirmed its outlook for fiscal year 2025. Its full-year guidance includes plans to offset tariff-related costs. The company expects net sales for the year to grow 0-2% on a reported basis and 1-3% in constant currency. Sales growth is expected to be driven by volume growth and gradual improvement in the Consumer business in China. GAAP EPS is expected to be $2.98-3.03, representing a growth of 2-4%, and adjusted EPS is projected to be $3.03-3.08, indicating growth of 3-5%.