Cholula maker McCormick predicts tepid annual sales, profits on slowing demand, rising expenses

(Reuters) – Hot sauce maker Cholula McCormick forecast annual sales and profits below analysts’ estimates on Thursday, hurt by a persistent decline in demand for its spices and condiments, particularly in China, as well as higher marketing expenses.

Packaged food companies including McCormick, General Mills and Conagra Brands also faced slowing demand across geographies as sticky inflation forced budget-conscious customers to hunt for value even on essential items like and food.

The increase in marketing and advertising efforts also took a toll on the company’s profit expectations, with costs rising 2.3% in the fourth quarter. McCormick now projects adjusted annual profit to grow by 3% to 5%, below expectations of 6.5%, according to data compiled by LSEG.

For fiscal year 2025, the company expects sales to be flat or grow up to 2%, compared to analysts’ estimates of a 2.4% increase, according to data compiled by LSEG. Sales rose 0.9% in fiscal 2024 and 4.9% in 2023.

McCormick could also come under pressure from potential import tariffs that US President Donald Trump plans to impose, as the company relies heavily on ingredients sourced from China and Europe.

Shares of the Hunt Valley, Maryland-based company, which rose 11% last year, fell 1.4% in premarket trading.

McCormick, however, reported a tight pace for sales and profit in the fourth quarter ended Nov. 30, despite a 6.9% decline in sales in the Asia-Pacific region that includes its China operations.

The company posted net sales of $1.8 billion for the quarter, compared to analyst estimates of $1.77 billion. Adjusted profit was 80 cents per share for the quarter, compared with analysts’ estimates of 77 cents.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Krishna Chandra Eluri)