Spices Giant McCormick Cuts Profit Outlook As Tariffs And Costs Bite

McCormick & Company (NYSE:MKC) shares dropped in premarket trading Tuesday despite the company's third-quarter earnings surpassing analyst estimates. The decline was driven by investor concerns over rising costs and a trimmed outlook for earnings per share.

The global manufacturer, marketer, and distributor of spices, herbs, extracts, and seasonings reported third-quarter adjusted earnings per share of 85 cents, beating the analyst consensus estimate of 81 cents.

Quarterly sales of $1.724 billion outpaced the Street view of $1.713 billion.

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Net sales rose 3% in the third quarter, including a 1% currency tailwind.

Consumer segment net sales increased 4% from the third quarter of 2024 to $973 million, including a 1% favorable impact from currency.

Organic sales increased 3%, driven by volume and product mix. Brendan M. Foley, CEO, stated, “Our third quarter results marked our fifth consecutive quarter of volume-led growth, reflecting our differentiation and the benefit of continued investments in our brands, expanded distribution, and innovation.”

Total Flavor Solutions sales rose 1.2% as reported in the quarter under review.

Adjusted gross profit fell 0.6% year over year to $646.1 million. Adjusted gross margin fell 120 basis points to 37.5%. The contraction was driven by higher commodity costs, tariffs, and costs to support increased capacity for future growth.

Adjusted operating income increased to $294 million from $288 million. Adjusted operating margin fell 20 basis points to 17%.

The company exited the quarter with cash and equivalents worth $94.9 million. Operating cash flow, or net cash from operating activities, totaled $420.2 million for the nine months ended August 31, 2025, down from $463.2 million in the same period last year.

Outlook

McCormick & Co. trimmed its full-year 2025 adjusted EPS outlook to $3.00–$3.05 from $3.03–$3.08, versus the $3.04 consensus estimate. The company maintained its constant-currency net sales growth guidance of 1%–3%.

“Amid rising inflation from higher commodity costs and tariffs, we continue to invest in our growth plans, supported by our cost savings initiatives, which strengthen our resilience and differentiated fundamentals,” the CEO added. 

MKC Price Action: McCormick stock was trading lower by 1.89% to $67.00 premarket at last check Tuesday.

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