Spice maker McCormick & Company has posted sales growth of 3% in constant currency in its financial year ended 30 November 2022.
Pricing accounted for an 8% increase in sales, which was offset by a 5% decrease in volume and product mix.
The volume decline comprised a 1% unfavourable impact from lower consumption in China due to COVID-related restrictions, and the exit of a low-margin business in India and the consumer business in Russia.
The impact of lower sales from the divestiture of Kitchen Basics was offset by one month of incremental sales from the acquisition of FONA, the company noted.
Lawrence E Kurzius, chairman and CEO, stated, "Our fourth quarter concluded a challenging year for McCormick as we navigated a dynamic global environment including persistently high-cost inflation and supply chain challenges, significant disruptions in China related to COVID, and the conflict in Ukraine.
"Despite market-driven volatility, we ended the year with positive momentum in consumer consumption trends and Flavor Solutions demand, stabilised service levels and supply, and meaningful progress in starting to reshape our cost structure, all of which are important drivers in our continued execution of McCormick's long-term strategies."
Annual Highlights
Compared with the pre-pandemic baseline year 2019, the three-year constant currency CAGR stood at 6%, with the consumer segment and flavour solutions unit growing by 5% and 8%, respectively.
Gross profit margin declined 370 basis points versus 2021 and adjusted gross profit margin, excluding special charges and transaction and integration expenses, declined 390 basis points, the company added.
The company attributed this decline to higher cost inflation and other supply chain costs, as well as an unfavourable product mix, partially offset by pricing actions and cost savings led by the Company's CCI programme.
in 2022, operating income declined to $864 million compared to $1.02 billion in 2021, driven by gross margin compression, primarily in the Company's Flavor Solutions segment.
It was partially offset by lower selling, general and administrative expenses, and lower transaction and integration expenses.
Excluding transaction and integration expenses, as well as special charges, adjusted operating income amounted to $917 million from $1.10 billion in the year-ago period.
Outlook
McCormick & Company expects year-on-year sales to increase by 5% to 7% in its financial year 2023 while operating income is projected to grow between 10% to 12%.
Adjusted operating income is expected to increase in the range of 9% to 11%, the company noted.
Kurzius said, "As we look ahead to fiscal 2023, we will focus on capitalising on strong demand, optimising our cost structure, and positioning McCormick to deliver sustainable growth and long-term shareholder value.
"The fundamentals that drove our industry-leading historical financial performance remain strong and we are confident we are well positioned to drive profitable growth in 2023."
© 2023 European Supermarket Magazine – your source for the latest A-Brands news. Article by Dayeeta Das. Click subscribe to sign up to ESM: European Supermarket Magazine.
