McCormick & Company, Incorporated

What they do

McCormick manufactures, markets, and distributes herbs, spices, seasoning mixes, condiments, and other flavorful products to retailers, food manufacturers, and foodservice businesses. It operates two segments: Consumer and Flavor Solutions, and is also a partner in joint ventures, most significantly McCormick de Mexico. Major sales, distribution, and production facilities are located in North America, Europe, and China, with additional facilities in Australia, Central America, Thailand, and South Africa. In fiscal 2025, approximately 39% of sales were generated outside the U.S.

Revenue drivers

• Consumer segment — Sells branded spices, seasonings, condiments, and sauces (McCormick, French's, Frank's RedHot, Lawry's, Cholula, Club House, Ducros, Schwartz) plus private label to retailers in approximately 150 countries. It contributed about 58% of consolidated net sales and 67% of consolidated operating income in 2025.
• Flavor Solutions segment — Supplies customized flavors, seasonings, and branded packaged products to multinational food manufacturers and foodservice customers. It contributed about 42% of consolidated net sales and 33% of consolidated operating income in 2025.
• McCormick de Mexico — A prominent Mexican food company with a portfolio including mayonnaise, spices, marmalades, mustard, hot sauce, and tea sold under McCormick brands. McCormick raised its ownership to a 75% controlling interest on January 2, 2026, and the acquisition contributed 12.3% of second-quarter 2026 net sales growth.
• Base business, new products, and acquisitions — Management expects sales growth over time to come in similar contributions from base business driven by brand marketing and category management, new products, and acquisitions, with acquisitions approximating one-third of sales growth.

Recent performance

In the second quarter ended May 31, 2026, net sales rose 16.7% year over year, including a 2.7% favorable currency impact and a 12.3% contribution from the McCormick de Mexico acquisition; organic sales growth was 1.7%. Second-quarter operating income was $276.4 million versus $245.8 million a year earlier, while reported diluted EPS fell to $0.56 from $0.65 and adjusted EPS rose to $0.80 from $0.69. Gross profit margin expanded 270 basis points to 40.2%, driven by the McCormick de Mexico acquisition. For full-year 2025, net sales rose 1.7% to $6.84 billion, operating income was $1,070.8 million, and diluted EPS was $2.93 versus $2.92 in 2024.

Strategy

Management's long-term constant-currency objectives are 4% to 6% sales growth, 7% to 9% adjusted operating income growth, and 9% to 11% adjusted EPS growth. Growth is expected from brand marketing, new product innovation, and acquisitions, supported by over 20 product innovation centers. On March 31, 2026, McCormick entered a Merger Agreement with Unilever under which Unilever will separate Unilever Foods for combination with McCormick in a Reverse Morris Trust transaction; Unilever shareholders would own approximately 55.1% of the combined company, McCormick shareholders approximately 35.0%, and Unilever up to approximately 9.9%, with Unilever receiving a one-time $15.7 billion cash payment. McCormick also completed the purchase of an additional 25% of McCormick de Mexico for $750 million on January 2, 2026.

Risks

• Global economic and inflation risk — Deterioration of global economic conditions, recession, inflation, or economic uncertainty in key markets may reduce customer and consumer spending on McCormick products.
• Tariff and trade uncertainty — New or increased tariffs or trade restrictions are cited as supply-chain challenges; after the February 20, 2026 Supreme Court ruling on IEEPA tariffs, McCormick submitted a refund request on April 28, 2026, and the CIT order has been appealed.
• Unilever transaction execution and approval risk — The proposed Unilever Foods combination is subject to customary closing conditions, including shareholder and regulatory approvals, and involves a Reverse Morris Trust structure requiring tax qualification.
• Commodity cost and margin pressure — In 2025 gross profit margin fell 60 basis points on increased commodity costs including tariffs, unfavorable product mix, and higher conversion costs, partly offset by pricing and cost savings.

Outlook

For fiscal year 2026, McCormick reaffirmed its sales growth, adjusted operating income, and adjusted earnings per share outlook. Management expects to sustain momentum in Flavor Solutions and increase reinvestment to improve Consumer volume trends and organic sales. It also continues integration planning for the proposed Unilever Foods combination and expects significant earnings per share accretion from the transaction.