MD-based McCormick tops Q2 profit estimates on higher pricing

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Maryland-based Cholula hot sauce maker McCormick handily beat Wall Street estimates for second-quarter profit on Thursday, as higher prices for its spices and condiments helped offset rising commodity costs.

McCormick also joined peers, including Campbell’s, in reaffirming its annual forecast, while warning the outlook reflects an uncertain demand environment and the Middle East conflict.

The results are the first since McCormick announced its planned merger with Unilever‘s food business in a roughly $45 billion deal that would significantly expand its presence beyond spices and condiments.

Shares of the Hunt Valley-based company were up about 3% in early trading. The stock was down about 30% this year through its last close.

Barclays analysts said the profit beat and reiterated forecast “should be good enough”, especially as investors were concerned about a potential cut in the outlook amid a “somewhat softer consumer environment in the Americas”.

The company, which posted quarterly adjusted gross profit growth of nearly 25% to $778.2 million, said tariff refunds reduced cost of goods sold by $28 million.

McCormick had been facing pressure from import tariffs on raw materials, including pepper and various spices and herbs sourced outside the U.S.

The company expects another $3 million in refunds this year, and said the gains would help offset increased costs, including those tied to the Middle East conflict.

The Stubb’s barbecue sauce maker reported an adjusted profit of 80 cents per share for the quarter, beating analysts’ average estimate of 69 cents per share, according to data compiled by LSEG.

Its quarterly revenue rose 16.7% to $1.94 billion, helped by factors including higher pricing, increased eat-at-home trends, and gains from its Mexico joint venture. Analysts, on average, expected McCormick to record $1.91 billion.

Overall volumes fell 0.5%, while prices rose 2.2% in the quarter. The company expects organic growth in the second half of the year to be supported by improving volumes.

McCormick reaffirmed its annual sales growth target of 13% to 17% and adjusted profit per share of $3.05 to $3.13.

Reporting by Neil J. Kanatt in Bengaluru; editing by Leroy Leo.