McCormick on Track to Build $20 Billion Mega-Flavor Powerhouse With Unilever Deal

McCormick & Company, Incorporated (NYSE:MKC) stock rose in Thursday premarket trading after the spice maker reported better-than-expected fiscal 2026 third-quarter results and reaffirmed its full-year outlook.The company reported adjusted earnings of 86 cents per share, beating the analyst estimate of 76 cents.Net sales rose 17.4% year over year to $2.02 billion, beating the consensus estimate of $1.98 billion. Organic sales increased 1.9%.McCormick Organic Growth and Margins ImproveMcCormick reported organic growth across its global flavor portfolio, supported mainly by a 2.2% increase in pricing.Gross profit margin expanded 190 basis points from a year earlier. Adjusted gross profit margin increased 180 basis points.Adjusted operating income rose 22% to $359 million from $294 million a year earlier. Favorable currency movements added about 1% to growth.The company said higher gross profit, savings from its CCI program and streamlining initiatives helped results. Those gains were partly offset by acquisition costs, brand marketing spending and technology investments.The company ended the quarter with $331.1 million in cash and cash equivalents and nearly $5 billion in total debt.Consumer and Flavor Solutions Sales RiseConsumer segment net sales rose 25% year over year to $1.2 billion. Growth reflected contributions from McCormick de Mexico and favorable currency movements.Consumer organic sales increased 1%. A 2% increase in pricing was partly offset by a 1% decline in volume and product mix.Flavor Solutions net sales increased 8% year over year, also helped by McCormick de Mexico and favorable currency effects.Organic sales in the segment rose 3%, driven by a 2% increase in pricing and a 1% gain in volume and product mix.Chairman, President and CEO Brendan M. Foley said McCormick’s third-quarter performance showed the strength of its flavor-focused business model despite a challenging operating environment.Foley said productivity initiatives helped offset higher input and freight costs, allowing McCormick to expand margins while continuing to invest in its brands. See More: Top Value Stocks McCormick Reaffirms Fiscal 2026 OutlookMcCormick reaffirmed its fiscal 2026 outlook for net sales growth, adjusted operating income and adjusted earnings per share.The forecast includes contributions from its acquisition of a controlling interest in McCormick de Mexico, which closed Jan. 2.The company expects fiscal 2026 revenue of $7.729 billion to $8.003 billion, compared with the analyst estimate of $7.896 billion.It expects reported net sales growth of 13% to 17%, supported by stable volumes and stronger pricing. Organic sales are expected to increase 1% to 3%.McCormick expects adjusted operating income to increase 16% to 20% on a reported basis and 15% to 19% in constant currency.Adjusted gross margin is expected to expand by 100 to 120 basis points. The company cited organic sales growth, McCormick de Mexico and savings from its CCI program.McCormick expects benefits from IEEPA tariff refunds to be offset by higher inflation-related costs and investments to support growth.Adjusted earnings are expected to range from $3.05 to $3.13 per share, compared with the analyst estimate of $3.09.The company expects a 24% tax rate and higher net interest expense, mainly related to the McCormick de Mexico transaction.Unilever Foods Combination Remains on TrackMcCormick said integration planning for its proposed combination with Unilever’s Foods business remains on track.In March, McCormick agreed to combine with Unilever’s Foods business, excluding India and certain other operations. The deal would create a global flavor-focused company with about $20 billion in combined 2025 revenue.McCormick said it remains confident the transaction will deliver significant earnings-per-share accretion after closing.The transaction is expected to close by mid-2027, subject to regulatory approvals and customary closing conditions.McCormick Price ActionMKC Price Action: McCormick shares were up 3.88% at $48.20 during premarket trading on Thursday, according to Benzinga Pro data.Image via Shutterstock Read Also: Gavin Newsom Mocks 'Golden Age of Super Intelligence,' Calls President’s 'Let It Rip' Approach to AI 'Reckless'