McCormick & Co (MKC) 2021 Q1 Financial Performance Analysis

McCormick & Co (NYSE:MKC) traces its roots back to 1889 when Willoughby M. McCormick started producing root beer, flavoring extracts, and juices in his home. He initially sold his products door-to-door under different labels such as Bee Brand and Silver Medal. Today, McCormick is a global leader in flavor with operations in 160 countries.

The Baltimore, Maryland-based company recently announced its financial results for the first quarter above expectations. McCormick reported earnings of $161.8 million, or 60 cents per share for the three months ended February 28, as compared to $144.7 million, or 54 cents per share in the same period of 2020. Excluding certain items, it reported an adjusted profit of 72 cents per share, higher than 54 cents per share in the year-ago quarter.

Revenue increased 22 percent on a year-over-year basis to $1.48 billion. Analysts on average were looking for an adjusted profit of 59 cents per share on revenue of $1.38 billion. If we look at the performance of key businesses, sales at the consumer segment jumped 35 percent, as an increasing number of people started cooking at home during the pandemic.

Comparatively, sales at the flavor solution segment increased just 4 percent on a year-over-year basis, as strong demand from packaged food companies was partly offset by weak demand from restaurants and foodservice clients.

Speaking on the results, CEO Lawrence Kurzius said in a statement, “In the first quarter, we delivered double-digit sales, adjusted operating income, and adjusted earnings per share growth. Our differentiated results prove the strength of our business model, the value of our products, and our capabilities as a company. We are confident the breadth and reach of our portfolio differentiates McCormick and the successful execution of our strategies will continue to drive long-term sustainable growth.”

Meanwhile, McCormick revised its sales growth projection for fiscal 2021. It now expects its sales to grow in the range of 8 percent to 10 percent, up from its previous outlook of 7-9 percent growth.

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