McCormick Cuts FY21 EPS Outlook, Warns About Cost Inflation

McCormick & Company Inc MKC reported third-quarter FY21 sales growth of 8% year-on-year, to $1.549 billion, marginally beating the analyst consensus of $1.540 billion. Sales improved 17% on a two-year basis.
The consumer segment sales rose 1.2% Y/Y, and flavor solutions sales increased 21%.
The gross profit rose 1.6% Y/Y to $599.6 million. The gross margin contracted 260 basis points to 38.7%, driven by higher cost inflation and unfavorable product mix.
The operating margin was 17.1%, and operating income for the quarter fell 2.9% to $265 million. Adjusted operating income margin shrank 150 basis points to 17.6%.
McCormick held $312.6 million in cash and equivalents as of August 31, 2021. Net cash provided by operating activities for the nine months totaled $372.9 million.
Adjusted EPS of $0.80 beat the analyst consensus of $0.72.
"We are currently operating in a dynamic cost environment and like the rest of the industry, experiencing cost pressures," said CEO Lawrence E. Kurzius.
Outlook: McCormick has cut the FY21 adjusted EPS outlook to $2.97 - $3.02 (prior $3.00 - $3.05) versus the consensus of $3.02.
The company now expects to grow FY21 sales Y/Y by 12% - 13% (prior view 11% - 13%).
Price Action: MKC shares are trading lower by 1.28% at $82.61 on the last check Thursday.

Earnings Calendar