Cholula maker McCormick forecasts tepid annual sales, profit By Reuters

(Reuters) – Cholula hot sauce maker McCormick ( NYSE: ) forecast full-year sales and profit below analysts’ estimates on Thursday, hurt by steady demand for its spices and seasonings, particularly in China, and higher marketing costs.

Packaged food companies, including McCormick, General Mills ( NYSE: ) and Conagra Brands ( NYSE: ) have also faced slowing demand across geographies as sticky inflation has forced budget-conscious customers to look for value even on staples like groceries.

“The environment in China remains a challenge,” McCormick CEO Brendan Foley said on a post-earnings call, but he expects to see a gradual recovery in the region over the course of the year.

Foley also added that McCormick has been working to make changes to product formulations, including removing artificial colors and reducing sodium, after the US Food and Drug Administration banned the use of synthetic food dyes that cause cancer in lab rats.

“These are areas we’ve been working on until 2025,” Foley said.

According to data compiled by LSEG, the company expects sales to be flat or up 2% in fiscal 2025, compared with analysts’ estimates of 2.4% growth.Sales rose 0.9% in fiscal 2024 and 4.9% in 2023.

McCormick now projects annual adjusted profit growth of 3% to 5%, below expectations of 6.5%, according to data compiled by LSEG, after a 2% increase in sales and general expenses in the fourth quarter.

The company’s shares, however, rose 2% after it reported weaker sales and profit for the fourth quarter ended Nov. 30.

The company posted net sales of $1.8 billion in the quarter, beating estimates of $1.77 billion, while earning adjusted earnings of 80 cents per share, versus analysts’ estimates of 77 cents ” and to remove the reference to “stubborn weakness” in paragraph 1. The error also appeared in an earlier version of the story.)