By Sanskriti Shekhar Jan 22 (Reuters) – McCormick on Thursday forecast a weak profit for fiscal 2026 as higher costs from tariffs and commodities squeeze margins, with the hot sauce maker also expecting an incremental cost impact for the year. Shares of the company, which also missed fourth-quarter profit estimates, were down about 8%. The […]
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Cholula sauce maker McCormick forecasts weak annual profit on tariffs, higher input costs
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By Sanskriti Shekhar
Jan 22 (Reuters) – McCormick on Thursday forecast a weak profit for fiscal 2026 as higher costs from tariffs and commodities squeeze margins, with the hot sauce maker also expecting an incremental cost impact for the year.
Shares of the company, which also missed fourth-quarter profit estimates, were down about 8%.
The Trump administration’s uncertain trade policy has led to higher commodity prices. At the same time, the company’s investments in production facilities and brand marketing have pressured its margins.
“Inflation, commodity cost volatility, and the macro-environment created incremental costs that impacted our margin,” CEO Brendan Foley said on a post-earnings call.
“Approximately 50% of the incremental tariffs on McCormick items remain in place, and we continue to face related inflationary pressures.”
The company expects an incremental cost impact from tariffs of about $50 million in fiscal year 2026. It said it imports some spices such as pepper as well as herbs, as of 2024.
Deutsche Bank analyst Steve Powers said that while the stock may face near-term pressure due to the weak quarterly profit and annual forecast, the spice maker should benefit from strong sales and its acquisition of McCormick de Mexico.
McCormick sees annual adjusted profit per share between $3.05 and $3.13, compared with analysts’ estimates of $3.22, according to data compiled by LSEG.
The Hunt Valley, Maryland-based company reported an adjusted profit of 86 cents per share for the quarter ended November 30, compared with estimates of 88 cents per share.
Quarterly volumes in McCormick’s consumer segment, a major revenue contributor, rose 1% from a year ago, while prices were up 2%.
Net sales rose 3% to $1.85 billion, but were in line with expectations.
For the full year 2026, McCormick expects to grow sales by 12% to 16% in constant currency, compared to analysts’ estimate of a 7.5% rise.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Shailesh Kuber and Sahal Muhammed)