TLDR
- McCormick reported 2% organic sales growth in Q2, led by a 3% rise in the Consumer segment.
- Adjusted EPS held flat at $0.69; adjusted operating income rose 10% year-over-year.
- Tariff exposure for 2025 estimated at $50M, but the company plans mitigation through sourcing and cost control.
- Gross margin compressed slightly due to commodity inflation and investment in future capacity.
- Fiscal 2025 outlook reaffirmed; EPS guided at $3.03 to $3.08 despite currency and trade headwinds.
McCormick & Company, Inc. (NYSE: MKC) stock traded at $76.79 as of 1:17 PM EDT on June 27, down 1.00% on the day, after the company reported mixed but resilient second-quarter results and reaffirmed its full-year outlook.
McCormick & Company, Incorporated (MKC)
The spice and flavoring giant continues to navigate cost inflation, geopolitical challenges, and tariff exposure with strategic sourcing and operational discipline.
Strong Consumer Growth Offsets Flat Flavor Solutions Segment
For the quarter ending May 31, 2025, net sales increased 1%, while organic sales grew 2%, fueled by a 3% rise in the Consumer segment. Growth was strongest in the Americas and EMEA regions, supported by demand for McCormick’s expanding product lines, such as air fryer seasonings and finishing salts.
The Flavor Solutions segment, however, saw flat organic sales. Volume declines, especially in EMEA, were attributed to geopolitical boycotts and weaker customer volumes, partly offset by pricing gains. Operating income for the segment still grew 10% year-over-year, aided by cost savings and better product mix.
Flat EPS and Gross Margin Amid Higher Costs
Gross profit margin compressed by 20 basis points versus the same period last year, as commodity costs and capacity investments weighed on profitability. Still, gross profit increased by $3 million year-over-year.
McCormick reported adjusted operating income of $259 million, up 10% from $236 million a year ago, or 11% in constant currency. Adjusted EPS remained flat at $0.69 due to a less favorable tax rate, despite higher operating income and improved performance from unconsolidated operations.
Tariff Exposure and Cost Controls in Focus
A key concern for 2025 is McCormick’s $90 million annual tariff exposure, with $50 million expected to impact this year. Tariffs include a 10% general U.S. import tariff and an additional 30% on goods from China. The company has responded with aggressive mitigation efforts, such as strategic sourcing, cost-saving initiatives under its Comprehensive Continuous Improvement (CCI) program, and revenue growth management strategies.
McCormick is focused on mitigating tariff impact on agriculture, says CEO Brendan Foley https://t.co/twaDO2eyEs
— CNBC (@CNBC) June 26, 2025
CEO Lawrence Kurzius highlighted the company’s success in offsetting pressures, stating that “volume-led growth remains our priority, supported by targeted innovation and operational discipline.”
Cash Flow and Capital Allocation Trends
Cash flow from operations dropped to $161 million, down from $302 million in the same quarter last year, primarily due to working capital timing. Capital expenditures stood at $85 million. Despite the cash flow dip, McCormick remains confident in its ability to generate strong full-year cash flow and continue shareholder returns through dividends.
Fiscal 2025 Outlook Reaffirmed
McCormick reaffirmed its fiscal 2025 guidance, expecting net sales growth of 1% to 3% and adjusted EPS between $3.03 and $3.08. Currency headwinds are expected to reduce earnings by 2%. The outlook does not include potential new tariff actions, focusing only on those currently enacted.
Though the broader market outpaces McCormick, MKC has returned just 1.43% YTD versus the S&P 500’s 5.09%, the company’s brand strength and operational resilience keep it on a steady path amid global volatility.
