Cholula maker McCormick predicts weak annual sales, profit as demand slows, rising costs Reuters
(Reuters) – Hot sauce maker Cholula McCormick (NYSE: ) on Thursday forecast full-year sales and profit below analysts’ estimates, hurt by a steady decline in demand for its spices and seasonings, particularly in China, as well as higher marketing costs.
Packaged food companies including McCormick, General Mills (NYSE: ) and Conagra Brands (NYSE: ) also faced slowing demand across geographies as sticky inflation forced budget-conscious shoppers to look for value even on essential items like groceries.
Increased marketing and advertising efforts also weighed on the company’s profit expectations, with expenses rising 2.3% in the fourth quarter. McCormick now forecasts annual adjusted profit growth of 3% to 5%, below expectations of 6.5%, according to data compiled by LSEG.
For fiscal 2025, the company expects sales to be flat or up as much as 2%, compared with analysts’ estimates of a 2.4% increase, according to data compiled by LSEG. Sales rose 0.9% in fiscal 2024 and 4.9% in 2023.
McCormick could also come under pressure from potential import tariffs that US President Donald Trump plans to impose, as the company relies heavily on ingredients from China and Europe.
Shares of the Hunt Valley, Maryland-based company, which have risen 11% in the past year, fell 1.4% in premarket trading.
McCormick, however, reported a narrow decline in sales and profit in the fourth quarter ended Nov. 30, despite a 6.9% drop in sales in the Asia-Pacific region, which includes operations in China.
The company had net sales of $1.8 billion for the quarter, compared to analyst estimates of $1.77 billion. Adjusted earnings were 80 cents per share for the quarter, compared with analysts’ estimates of 77 cents.
