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McCormick is trading lower after reporting an EPS miss with its Q4 (Nov) earnings report, marking just its second EPS miss in the past 12 quarters. Revenue was a modest bright spot, edging past expectations, while initial FY26 guidance was mixed.

• Q4 revenue increased 2.9% yr/yr to $1.85 bln, a slight beat, but EPS came in below estimates.
• With FY25 complete, MKC issued its first look at FY26 guidance, featuring downside EPS alongside upside revenue expectations. Guidance may be somewhat skewed by the recent acquisition of a controlling interest in McCormick de Mexico, which may not have been fully reflected in Street models.
• Gross margin was pressured by higher commodity costs, tariffs, and investments to support increased capacity for future growth, partially offset by cost savings initiatives.
• The Consumer segment, which carries higher margins, drove Q4 performance with sales up 4.0% yr/yr (+3.0% organic) to $1.13 bln. Global Consumer organic growth was fueled by volume gains for the seventh consecutive quarter, along with price contributions. Pricing rose ~2%, reflecting tariff- and inflation-related actions, while volume and mix increased ~1%. Notably, MKC achieved its planned full-year recovery in China Consumer, a key milestone for FY25.
• Flavor Solutions (FS) segment sales increased 2.0% yr/yr (+1.0% organic) to $723 mln. Growth was driven by ~2% pricing, partially offset by a ~1% decline in volume and product mix, as global FS volumes remained under pressure. Performance was impacted by customer inventory resets in Latin America, which MKC expects to be largely behind it in FY26. Outside of Latin America, volumes were roughly flat, reflecting softness among large CPG and branded foodservice customers, mostly offset by growth from high-growth innovators, private label customers, and QSRs across the Americas and Asia Pacific.

Briefing.com Analyst Insight:

The market's negative reaction appears centered on the EPS miss and cautious FY26 profitability outlook, despite steady revenue growth and improving volume trends in the higher-margin Consumer segment. Margin pressures from commodities, tariffs, and capacity investments remain a near-term overhang, particularly for Flavor Solutions, where volume softness persists. While pricing power, China recovery, and potential normalization in Latin America provide longer-term support, investors appear hesitant until margin visibility improves and the earnings impact of the Mexico acquisition becomes clearer.