McCormick & Company Incorporated

McCormick & Company's Flavor Solutions business posted stronger-than-expected volume growth in the second quarter of fiscal 2026, with segment sales up 6% in constant currency on a 3% acquisition contribution and 3% organic growth. Organic growth was split evenly between volume and pricing, and the Americas led the way with 4% organic sales growth driven by a 2% price contribution and a 2% volume increase. Strength came from the Flavors portfolio, including large CPG customers, high-growth innovators, private-label customers, and Branded Foodservice, where distributor volume recovery, sustained non-commercial demand, and strong e-commerce performance supported results. EMEA organic sales were flat amid softer quick-service restaurant traffic, particularly in the United Kingdom, while Asia-Pacific organic sales were also flat as 1% volume growth was offset by price. McCormick expects Flavor Solutions volume momentum to continue and the segment to drive total company volume growth for fiscal 2026.

Fundsmith Equity Fund expressed disappointment with Unilever's recent leadership changes and strategic moves in its second-quarter 2026 investor letter. The fund initially welcomed Hein Schumacher's appointment as CEO but noted he was fired after 18 months and replaced by CFO Fernando Fernandez. Fundsmith said Fernandez's promotion was quickly followed by the spin-out of the ice cream business as Magnum Ice Cream Company, and later an announcement to transfer the remainder of the food business to McCormick, contradicting earlier assurances that no further disposals were planned. Unilever shares closed at $63.41 on July 31, 2026, with a market capitalization of $4.35 billion, and lost 1.62% over the past 52 weeks.

Unilever has agreed commitments with its European workers regarding the protection of employees' terms and conditions and consultation timelines ahead of the planned sale of most of its food business to US spices maker McCormick & Co. The London-headquartered FMCG major expects to close the transaction by the middle of next year, a deal that values Unilever's food assets at around $44.8 billion. The worker commitments in the UK and Europe are for two years post the 2027 completion of the transaction, according to Reuters. A representative for the IUF trade union suggested similar work guarantees have not been made to Unilever employees outside of Europe. Once the deal is concluded, Unilever shareholders are expected to own 55.1% of the enlarged group, McCormick shareholders 35% and Unilever 9.9%, with Unilever receiving $15.7 billion in cash.

Unilever posted first-half revenue of €25.6 billion with underlying sales growth of 4.8%, driven by a 4.2% rise in volumes, and upgraded its full-year guidance to 4% to 6% underlying sales growth. The second quarter saw underlying sales jump 5.8% and volumes surge 5.5%, the strongest quarterly volume performance since 2010, led by beauty and wellbeing, personal care, and home care divisions. Underlying operating profit edged up just 0.9% to €5.2 billion as currency moves and commodity inflation offset gains, while free cash flow rose 42.9% to €1.5 billion and net debt fell to €26 billion. CEO Fernando Fernandez is sharpening focus on higher-growth categories, with the food division being separated through a deal with McCormick. The volume recovery signals regained momentum, but margin expansion and European demand remain key tests ahead.

UK M&A value is tracking to a record high in 2026, reaching £178.9 billion in the year to July 7 and putting the market on pace for an annualized total of around £347 billion, which would eclipse the prior high of £309.2 billion set in 2015, according to PitchBook data. The top 10 deals accounted for roughly 52% of overall M&A value, with eight of those 10 largest transactions struck by strategic acquirers in the first six months, led by McCormick's $44.8 billion merger with Unilever's food business in March. Sponsor acquisitions made up just 33.1% of overall UK deal value in the first half of the year, the second-lowest share since 2014, and PE accounted for only 15.1% of the value of the 10 largest deals, as firms like EQT took Intertek private for £10.9 billion and TDR Capital acquired Escode for £3.09 billion. The gap stems from financing, as roughly two-thirds of McCormick's Unilever Foods combination was funded in stock, a currency PE funds cannot offer, while corporate acquirers rely on balance-sheet cash and equity to pursue scale that would once have drawn sponsor competition.

Greg Abel, who took over as Berkshire Hathaway CEO in 2026, should consider buying into McCormick as it plans to acquire Unilever's food business, despite the earlier Kraft Heinz merger's poor outcome. McCormick, an industry-leading spice and flavor company, is looking to roughly double its size by purchasing Unilever's well-run brands like Hellmann's and Knorr, a deal requiring about $16 billion in cash. With Berkshire holding nearly $400 billion in cash, Abel could help finance the transaction, potentially securing preferred stock, while McCormick's stock offers a historically high 3.7% yield and a low price-to-earnings ratio of around 9x. Unlike the struggling Kraft and Heinz, McCormick and Unilever's food unit are strong businesses, making this a more compelling investment than a cost-cutting merger.

McCormick & Company declared a quarterly dividend of $0.48 per share on its common stock, payable July 20 to shareholders of record on July 6. The company noted this marks its 102nd consecutive year of dividend payments. The regular corporate payout can generally qualify for preferential dividend tax treatment when shareholder-level requirements are met, giving McCormick a cleaner tax-efficiency profile than many income vehicles with ordinary-income or pass-through-style payouts.

Campbell's reported first-quarter revenues of $2.37 billion, down 4.4% year on year and slightly below analyst expectations. The broader shelf-stable food industry, comprising 17 tracked stocks, delivered mixed results with revenues in line with consensus but next-quarter guidance 11.6% below estimates. Among peers, Hershey stood out with revenues of $3.10 billion, up 10.6% and beating expectations, while BellRing Brands was the weakest performer with revenues of $598.7 million, up only 1.8% and missing estimates. Utz and McCormick also reported, with McCormick achieving the fastest revenue growth among peers at 16.7%.

McCormick & Company is leaning on health-focused innovation, cost savings, and portfolio expansion to drive long-term growth, even as consumer segment volumes remain negative. The company's Comprehensive Continuous Improvement program helped expand adjusted gross margin by 270 basis points to 40.2% in the latest quarter, while adjusted operating income rose 30.1% to $336.4 million. The acquisition of a controlling 75% stake in McCormick de Mexico contributed 12.3 percentage points to total sales growth, and the proposed Unilever Foods combination is expected to generate about $600 million in annual run-rate cost synergies. Flavor demand is benefiting from at-home cooking and better-for-you trends, with a majority of second-quarter briefs tied to health and wellness innovation. The stock currently carries a Zacks Rank #4 (Sell), reflecting cautious consumer spending and the need for better volume execution.

Global mergers and acquisitions surged to $2.6 trillion in the first half of 2026, up about 30% from a year earlier, putting dealmakers on track to potentially surpass the record set in 2021. Companies struck 38 deals valued at $10 billion or more, the most ever in a six-month period, including NextEra Energy's $67 billion bid for Dominion Energy and Unilever's planned $45 billion sale of its food division to McCormick. A business-friendly regulatory environment under the Trump administration and a push for scale driven by artificial intelligence are fueling the boom, with strong cross-border activity into the US. Private equity, however, lagged as high valuations and low interest rates made exits difficult, while some ambitious tie-ups like GameStop's $53 billion move on eBay were rejected. Deal makers expect the momentum to continue after the summer, though potential headwinds include economic concerns and the November election.

BlackBerry shares soared 20% after reporting first-quarter fiscal 2027 revenues of $152.9 million, beating the Zacks Consensus Estimate of $136.1 million. McCormick gained 1.6% after its second-quarter fiscal 2026 adjusted earnings of 80 cents per share exceeded the consensus of 69 cents. Meta Platforms fell 2.7% amid a continued tech slump driven by concerns over AI infrastructure costs. Bio-Techne surged 20.1% after Germany's Merck KGaA agreed to acquire the life sciences company in an $11.3 billion cash deal, boosting takeover optimism, while Merck KGaA jumped 5.3%.

McCormick & Company used its second-quarter earnings call to emphasize that its Flavor Solutions segment is driving the business, while management works to restore volume trends in U.S. consumer spices. Flavor Solutions' organic sales rose 3%, with growth split nearly evenly between price and volume, and the Americas segment posted 4% organic growth, helped by large CPG customers, private label, high-growth innovators, and stronger branded foodservice demand. Adjusted EPS came in at $0.80, beating the Zacks Consensus Estimate of $0.69 by 15.9%, and revenues of $1.94 billion topped the estimate of $1.90 billion by 2%, with gross margin expanding 270 basis points and adjusted operating income rising 30%. Management reaffirmed its 2026 outlook and said it is refining revenue growth management, adjusting price-pack architecture, expanding distribution, and increasing value-focused marketing to improve consumer trends by the third quarter and return to volume growth in the fourth. The company also provided updates on the pending Unilever Foods combination, with integration planning advancing and financial targets reiterated, including a 21% operating margin at close and mid- to high-single-digit adjusted EPS accretion within the first 12 months after closing.

McCormick & Co reported a 14% increase in total sales in constant currency for its fiscal second quarter, with 12 percentage points coming from the McCormick de Mexico acquisition and 2 percentage points from organic growth. Gross profit margin expanded by 270 basis points, helped by the acquisition, a tariff refund, and savings from the company's Comprehensive Continuous Improvement program. Adjusted operating income rose 30%, or 27% in constant currency, and adjusted earnings per share reached $0.80, a 16% increase from the prior year. The Consumer segment grew 20% in constant currency, including 1% organic growth, while Flavor Solutions grew 6% in constant currency, with 3% organic growth. Cash flow from operations for the first half was $431 million, up from $161 million a year earlier, and the leverage ratio stood at approximately 2.9 times at quarter-end.

Several stocks made significant moves in midday trading. Kymera Therapeutics surged 17% after enrolling in a Phase 2b trial for its atopic dermatitis drug KT-621. BlackBerry rallied 20% on better-than-expected fiscal first-quarter results, posting adjusted earnings of 4 cents per share on revenue of $152.9 million. Apple slid nearly 5% after announcing price hikes on MacBooks and iPads, citing growing demand and rising memory and storage costs. AeroVironment fell 4% ahead of its fourth-quarter report next Monday and after disclosing it will restate prior results. Microsoft dropped 3.8% after saying it would raise Xbox console prices by $100 for the 512-gigabyte model and $150 for the 1-terabyte model. Hertz Global declined more than 9% following a 37-million share secondary offering priced at $2.70 per share. Micron soared 15% after third-quarter adjusted earnings of $25.11 per share blew past expectations, with revenue quadrupling to $41.46 billion. Qualcomm gained 8% after nearly doubling its 2029 non-handset revenue projection to $40 billion. Memory stocks also moved higher, with Sandisk jumping 18%, Western Digital rising 7%, and Lam Research adding 5%. Wendy's reversed earlier gains to trade down nearly 3% as retail trader momentum eased. Trip.com shed almost 2% after its fourth-quarter adjusted earnings and revenue missed expectations. Bio-Techne rallied 19.7% after agreeing to be acquired by Merck for $73 per share. Dollar Tree dropped 1.6% after a major shareholder sold shares in a block trade. McCormick gained 4% after reporting second-quarter adjusted earnings of 80 cents per share, topping estimates.

McCormick reported quarterly earnings of $0.80 per share, surpassing the Zacks Consensus Estimate of $0.69 per share and marking a 15.29% earnings surprise. Revenue came in at $1.94 billion, beating the consensus estimate by 1.99% and up from $1.66 billion a year ago. The company has topped consensus EPS estimates three times in the last four quarters. McCormick shares have lost about 30.1% year to date, while the S&P 500 has gained 7.5%.

On Thursday, June 25, investors will watch quarterly results from Darden Restaurants, McCormick, and BlackBerry, along with the release of the Personal Consumption Expenditures index, the Federal Reserve's preferred inflation gauge. Economists forecast the PCE ticked up slightly on a month-over-month basis. Darden is expected to report same-store sales growth driven by menu pricing, marketing initiatives, and steady traffic at Olive Garden and Longhorn Steakhouse. McCormick's sales are anticipated to benefit from the addition of McCormick de Mexico, while organic growth remains largely price-driven, and investors will listen for commentary on the planned combination with Unilever's food business. BlackBerry's first-quarter results will be scrutinized for signs of improving profitability and positive cash flow, with attention on management's outlook and whether software growth can offset weakness in other segments.

McCormick & Company declared a quarterly dividend of $0.48 per share on its common stocks, payable July 20, 2026, to shareholders of record July 6, 2026. This marks the 102nd consecutive year of dividend payments by the company.

The global onion powder market is projected to grow from USD 1.34 billion in 2025 to USD 2.61 billion by 2035, at a compound annual growth rate of 6.2%, according to a new report by Custom Market Insights. The market is expected to reach USD 1.43 billion in 2026. Growth is driven by rising demand for convenient, shelf-stable ingredients in food processing, the popularity of natural flavor additives, and expanding use in ready-to-eat meals and snacks. North America currently leads the market, while the Asia Pacific region is forecast to experience the fastest growth due to high onion production in countries like India and China, increasing urbanization, and greater adoption of processed foods. Key players include McCormick & Company, Olam International, and Sensient Technologies.

Simply Good Foods reported first-quarter revenues of $326 million, down 9.4% year on year and missing analyst estimates by 5.2%, making it the weakest performer against expectations among the 17 shelf-stable food stocks tracked. The company also issued full-year EBITDA guidance and next-quarter revenue guidance that fell significantly short of analyst forecasts. Hershey delivered the best results of the group with revenues of $3.10 billion, up 10.6% year on year and beating estimates by 2.4%, while BellRing Brands had the weakest quarter overall with revenues of $598.7 million, up 1.8% but missing estimates by 1.7%, and its stock has since dropped 45%. Other notable performers included Mondelez with revenues of $10.08 billion, up 8.2% and beating estimates by 3%, and McCormick with revenues of $1.87 billion, up 16.7% and beating estimates by 5.1%, achieving the fastest revenue growth among its peers. On average, the tracked shelf-stable food stocks are down 8.3% since their latest earnings results, and next quarter's revenue guidance for the group came in 11.6% below analyst consensus.