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Shares of McCormick & Company, Incorporated (NYSE: MKC ) rose more than 2% on Friday. The stock has fallen 12% year-to-date. The condiment maker is scheduled to report first-quarter 2023 earnings on Tuesday, March 28, before the market opens. Here’s what to expect from the earnings report:
results
Analysts project net sales of $1.54 billion for McCormick for the first quarter of 2023. This compares with $1.52 billion reported in the same period a year ago. In the fourth quarter of 2022, net sales fell 2% year over year to $1.69 billion.
fortunate
The consensus estimate is for EPS of $0.51 in Q1 2023 which compares to adjusted EPS of $0.63 reported in the year-ago quarter. In Q4 2022, adjusted EPS fell 13% YoY to $0.73.
Points to note
In Q4 2022, McCormick faces challenges from inflation and supply chain challenges along with disruptions related to the pandemic and geopolitical factors. These factors will put pressure on business in the first quarter of 2023, but the company’s efforts to deal with inflation through price increases and cost savings may help mitigate the impact.
In its Q4 conference call, the company expected adjusted operating profit growth to be subdued in Q1. It also said the impact of cost inflation would weigh into the first half with inflation peaking in Q1. Additionally, expect Q1 sales and profits to be impacted by COVID-related headwinds in China and exits from the consumer business in Russia.
McCormick saw its gross margin decline by 380 basis points in Q4 due to higher cost inflation and other supply chain costs. This was partially offset by price actions and cost savings implemented through the company’s Comprehensive Continuous Improvement (CCI) program.
On the other hand, McCormick continues to benefit from the trend of consumers cooking food at home and the growing demand for flavor, which led to strong consumption trends along with sales growth in the Flavor Solutions segment in Q4. This, combined with its broad portfolio, gives the company a valuable advantage and positions it for growth in the coming fiscal year.
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