McCormick sales rise 17.4%, beat estimates on acquisition boost despite lower volume and mix
Key Facts
McCormick beat fiscal third-quarter sales and adjusted earnings expectations in results announced on October 1, 2026, with an acquisition driving much of the revenue growth. The results covered the period ended August 31, 2026, according to the company's statement. Quarterly sales totaled $2.02 billion, compared with analysts' expectations of $1.98 billion, according to LSEG data cited by Reuters. Adjusted earnings per share came in at 86 cents, exceeding estimates of 76 cents, the news agency reported. The earnings beat came alongside a companywide decline in volume and product mix, while pricing supported organic growth.
McCormick's breakdown of sales drivers showed reported sales rose 17.4% from the same period a year earlier. The acquisition accounted for the largest share of that increase, adding 14.6 percentage points to quarterly growth. Organic growth was 1.9%, well below the pace of reported sales growth, which included the acquisition's impact. Pricing contributed 2.2 percentage points to organic growth, offsetting the negative impact of volume and product mix. Volume and mix subtracted 0.3 percentage points from growth, partially offsetting the company's gains from pricing during the quarter.
Organic performance varied between the company's two segments, with Flavor Solutions growing faster than Consumer, according to the segments' sales-driver table. Flavor Solutions posted organic growth of 3.0% in the fiscal third quarter, supported by a positive contribution from volume and product mix. Volume and mix added 0.8 percentage points to the segment's growth, alongside a pricing contribution of 2.2 percentage points. In the Consumer segment, organic growth was 1.1%, with pricing also contributing 2.2 percentage points. However, volume and product mix subtracted 1.1 percentage points from Consumer segment growth, limiting the impact of pricing on its sales.
Adjusted operating income rose to $358.5 million from $293.6 million in the same period a year earlier, according to the quarterly report filed with the U.S. Securities and Exchange Commission. Gross profit margin was 39.3% in the third quarter, up 190 basis points year on year. The company attributed the margin support to the acquisition of McCormick de Mexico, favorable pricing and savings from its efficiency improvement program. In remarks accompanying the results, Chief Executive Brendan Foley pointed to pressure from higher input and freight costs. Foley said: "Disciplined productivity initiatives helped offset higher input and freight costs."
Net income attributable to McCormick, however, fell to $97.6 million from about $225.5 million in the third quarter a year earlier, according to the company's quarterly report. Reported diluted earnings per share declined to $0.36 from $0.84 in the same period. Quarterly special charges included $95.3 million in transaction and integration costs, as well as $43.1 million for the impairment of long-lived assets. The company linked the impairment to its decision to discontinue a pepper sourcing and agricultural technology project in Malaysia. It said changing economic and supply conditions had made the project's economics "less attractive."
McCormick shares fell about 3% in trading on the day of the results announcement, according to Reuters, despite sales and adjusted earnings per share exceeding analysts' estimates. The company maintained its sales growth forecast for the current fiscal year at between 13% and 17%. It also reaffirmed its adjusted earnings per share forecast of between $3.05 and $3.13, according to the earnings statement. Alongside its annual outlook, the company is awaiting completion of the merger with Unilever's food business, according to its accompanying update. McCormick expects the deal to close by mid-2027, subject to customary closing conditions and regulatory approvals.