McCormick Lifts FY24 Earnings View After Strong Q3 Results; Stock Up

(RTTNews) - Shares of McCormick & Co. Inc. were gaining around 5 percent in the pre-market activity on the NYSE after the seasonings and spices maker increased its fiscal 2024 outlook for earnings after reporting higher third-quarter earnings, above market. The company further reaffirmed its sales and operating profit growth outlook for the year on a constant currency basis.

Brendan Foley, President and CEO, stated, "This quarter we reached a meaningful milestone by delivering total global positive volume growth, reflecting improved trends across both segments, and we expect this momentum to continue into the fourth quarter. ...Our year to date results coupled with our growth plans reinforce our confidence in achieving the mid to high-end of our projected sales growth for 2024. Our business fundamentals are strong, and we expect to continue to deliver profitable growth."

FY24 Outlook

For fiscal year 2024, McCormick now expects earnings per share to be in the range of $2.81 to $2.86, compared to $2.52 of earnings per share in 2023. Adjusted earnings per share are now projected to be in the range of $2.85 to $2.90, compared to $2.70 a year ago, which represents an expected increase of 5 percent to 7 percent.

The company previously projected earnings per share on a reported basis to be in the range of $2.76 to $2.81, and adjusted earnings per share in the range of $2.80 to $2.85.

Analysts on average expect the company to earn $2.86 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Further, operating income in 2024 is now expected to grow by 9 percent to 11 percent from $963 million in 2023, and adjusted operating income is expected to increase 4 percent to 6 percent.

The previous view for operating income was to grow by 8 percent to 10 percent, and adjusted operating income to increase 3 percent to 5 percent, or in constant currency 4 percent to 6 percent.

In 2024, McCormick expects sales to range between a decline of 1 percent to an increase of 1 percent compared to 2023, with minimal impact from currency. The Company expects a favorable impact from the prior year's pricing actions.

Previously, the company expected sales to range between a decline of 2 percent to flat compared to 2023, or between a decline of 1 percent to an increase of 1 percent on a constant currency basis.

The company added that its strategic decisions in 2023 to discontinue low margin business and divest a small canning business will impact volume growth in 2024.

Q3 Results

McCormick's profit for its third quarter increased from the same period last year and beat the Street estimates.

The company's earnings totaled $223.1 million or $0.83 per share, compared to $170.1 million or $0.63 per share in last year's third quarter. Analysts had expected the company to earn $0.67 per share.

The company's sales for the quarter fell 0.3 percent to $1.679 billion from $1.684 billion last year as volume growth of 1 percent was partially offset by price.

In Consumer segment, the company delivered solid volume growth, despite a more challenging macro environment in China.

The company plans to host its Investor Day on October 22 in Hunt Valley, Maryland.

Ikn pre-market activity on the NYSE, McCormick shares were trading at $86.00, up 4.50 percent.

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