McCormick Q2 Earnings Beat Estimates, Organic Sales Grow

McCormick & Company, Incorporated MKC reported second-quarter fiscal 2025 results, with the top line increasing year over year but missing the Zacks Consensus Estimate. The bottom line was flat year over year but surpassed the consensus mark.The adjusted earnings of 69 cents per share were unchanged from the year-ago quarter. The Zacks Consensus Estimate was 65 cents per share. The comparable performance was driven by higher operating income and increased contributions from unconsolidated operations, partially offset by a less favorable tax rate resulting from discrete tax items. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)McCormick & Company, Incorporated Price, Consensus and EPS Surprise McCormick & Company, Incorporated price-consensus-eps-surprise-chart | McCormick & Company, Incorporated QuoteThis global leader in flavor generated net sales of $1,659.5 million, which was down from the Zacks Consensus Estimate of $1,663 million. However, the metric increased 1% from the year-ago period and included a 1% unfavorable currency impact. Organic sales grew 2% on favorable volume and product mix.MKC’s Quarterly Performance: Key Metrics & InsightsMcCormick’s gross profit for the fiscal second quarter rose $3 million, reaching $622.8 million. The gross profit margin contracted 20 basis points (bps) to reach 37.5%, primarily due to increased costs associated with expanding capacity for growth and higher commodity prices. These pressures were partially offset by cost savings driven by the company’s Comprehensive Continuous Improvement (“CCI”) program.The adjusted operating income increased 10%, totaling $259 million, with a 1% unfavorable impact from currency fluctuations. In constant currency, adjusted operating income increased 11%, largely due to lower selling, general and administrative (SG&A) expenses, driven by the timing shift of stock-based compensation expenses from the second quarter to the first quarter, along with ongoing cost savings from the CCI program, including SG&A streamlining initiatives. These gains were partially offset by lower gross margin, continued investment in brand marketing and higher technology spending.Decoding MKC’s Segmental PerformanceConsumer: Sales were $931 million, up 3% from the year-ago quarter’s level, with minimal impact from currency fluctuations. Organic sales advanced 3%, driven by favorable volume and product mix. Regionally, sales grew 2.4% in the Americas, 4.9% in EMEA and 2.9% in APAC. Our model expected Consumer sales of $918 million for the quarter.Flavor Solutions: Sales in the segment decreased 1% to $729 million, with a 1% unfavorable currency impact. Organic sales were flat year over year, caused by a 1% increase from price, offset by a 1% decrease in volume and product mix. Flavor Solutions’ sales in the Americas and EMEA inched down 1% and 4.7%, respectively. Its sales in APAC increased 3.1%. We anticipated Flavor Solutions' sales of $747 million for the quarter.MKC’s Financial Health SnapshotMcCormick exited the quarter with cash and cash equivalents of $124.1 million, long-term debt of $3,099.3 million and total shareholders’ equity of $5,630.4 million. In the six months ended May 31, 2025, net cash provided by operating activities was $161.4 million.For fiscal 2025, the company anticipates strong cash flow, driven by profitability and working capital initiatives. In addition, it expects to return a significant portion of this cash flow to shareholders through dividends.What to Expect From MKC in 2025?McCormick's fiscal 2025 outlook indicates its continued focus on strategic investments in key categories to strengthen volume trends and drive long-term profitable growth amid current uncertainty in the consumer and macroeconomic environment. The company's CCI program remains a key driver of growth investments and operating margin expansion. In addition, McCormick expects foreign currency fluctuations to negatively impact sales and adjusted operating income by 1% each, as well as adjusted earnings per share (EPS) by 2%.For fiscal 2025, management still expects net sales growth in the range of flat to increasing 2% (up 1-3% at constant currency). Sales are likely to be backed by volume-led growth across both company segments and a gradual improvement in China’s consumers.It expects adjusted operating income to grow 3-5% and increase 4-6% at constant currency. Management envisions fiscal 2025 adjusted EPS in the band of $3.03-$3.08, which indicates a 3-5% increase from the year-ago period. On a constant currency basis, the adjusted EPS is expected to increase 5-7%. On a GAAP basis, McCormick projects fiscal 2025 earnings in the range of $2.98-$3.03 per share, indicating 2-4% year-over-year growth.This Zacks Rank #4 (Sell) stock has lost 9.3% in the past three months compared with the industry’s decline of 5.3%.Image Source: Zacks Investment ResearchSome Solid BetsBRF S.A. BRFS raises, produces and slaughters poultry and pork for the processing, production and sale of fresh meat, processed products, pasta, margarine, pet food and other products. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for BRF S.A.'s current fiscal-year earnings implies growth of 27.8% from the prior-year levels. BRFS delivered a trailing four-quarter earnings surprise of 5.4%, on average.Mondelez International MDLZ manufactures, markets and sells snack food and beverage products. It presently has a Zacks Rank of 2. MDLZ delivered a trailing four-quarter earnings surprise of 9.8%, on average.The consensus estimate for Mondelez’s current fiscal-year sales implies growth of 5.3% from the year-ago figures.Oatly Group AB OTLY, an oatmilk company, provides a range of plant-based dairy products made from oats. It presently has a Zacks Rank of 2. OTLY delivered a trailing four-quarter earnings surprise of 25.1%, on average.The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.3% and 63.8%, respectively, from the year-ago figures.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report McCormick & Company, Incorporated (MKC): Free Stock Analysis Report BRF S.A. (BRFS): Free Stock Analysis Report Mondelez International, Inc. (MDLZ): Free Stock Analysis Report Oatly Group AB Sponsored ADR (OTLY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks