By focusing on the levers within our control, we are delivering profitable volume-led growth by investing in our brands, expanding distribution, driving innovation, and increasing operational efficiencies. McCormick remains a growth-oriented company with robust plans that leverage the demand for flavor and the strength of our brands. I will highlight some areas of success and the areas we continue to work on, as well as our growth plans. Marcos will then go into more depth on the second quarter results, as well as review our 2025 outlook, including a discussion of our tariff exposure and mitigation plans.
In the second quarter, total organic sales increased by 2%, primarily driven by volume growth, in line with our expectations. Volume growth of more than 3% in the consumer segment was partially offset by declines in flavor solutions, as expected. In global consumer, organic sales growth was volume-led across all three regions, demonstrating continued momentum across key markets. This sustained volume growth is supported by investments across our core categories, including innovative brand marketing, accelerated innovation aligned with consumer trends, expanded distribution, and robust category management initiatives.
In the Americas, we drove volume growth and share gains across core categories. This shift supports demand for flavorful, fresh, and healthy meals that offer both value and health benefits. We have numerous levers to manage this impact, which is enabling us to maintain our volume-led top-line growth and operating profit outlook for 2025, inclusive of tariffs. Across our global consumer segment, we continue to successfully execute on our plans and have driven share gains across our core categories in key markets for the last three quarters.
| Metric | Period | Current guidance |
|---|---|---|
| Organic net sales growth | FY2025 | 1%-3% (Maintained; volume-led, primarily consumer segment; flavor solutions volumes now expected flat for the year) |
| Adjusted operating income growth (constant currency) | FY2025 | 4%-6% (Maintained; implies higher second-half growth than first half) |
| Gross margin | FY2025 | Flat to up 50 bps (Lowered due to elevated commodity costs from global trade environment; expansion weighted to Q4) |
| Adjusted effective tax rate | FY2025 | 22%-23% (Slightly higher than prior guide due to changes in discrete tax benefits; vs 20.5% in 2024) |
| Adjusted EPS | FY2025 | Maintained (Reaffirmed alongside net sales and adjusted operating profit) |
| Gross annualized tariff exposure | FY2025 | ~$90M gross annualized; ~$50M in-year (Expect to fully offset current tariff costs in 2025 via sourcing, CCI, and surgical pricing) |
| Metric | YoY | Note |
|---|---|---|
| Total organic sales | +2% | Volume and mix growth, marking the fourth straight quarter of volume-led growth |
| Consumer segment organic sales | +3% | Volume and mix growth across all three regions supported by brand marketing, innovation, and category management |
| Consumer Americas organic sales | +3% | 4% volume growth partially offset by a 1% price decrease related to targeted incremental promotions |
| Consumer EMEA organic sales | +3% | 2% volume increase plus 1% price increase from targeted actions on higher commodity costs |
| Consumer Asia Pacific organic sales | +4% | Volume-driven, reflecting expected gradual recovery in China |
| Flavor solutions organic sales | Flat | 1% price offset by 1% volume/mix decline from soft packaged food and EMEA QSR customers |
| Flavor solutions Americas organic sales | +1% | 2% price (primarily Latin America currency) offset by 1% volume decline from CPG customer softness |
| Flavor solutions EMEA organic sales | -7% | 5% lower volume and 2% lower price from soft CPG and QSR volumes hit by Middle East-related geopolitical boycotts |
| Flavor solutions Asia Pacific organic sales | +3% | 5% volume growth from QSR customer promotions and limited-time offers, partially offset by 2% price |
| Adjusted operating income | +10% (+11% cc) | CCI savings and SG&A streamlining, partially offset by gross margin pressure and growth investments |
| Consumer segment adjusted operating income | +10% | Primarily improved SG&A expenses, minimal currency impact |
| Flavor solutions adjusted operating income | +10% (+13% cc) | Product mix, pricing, and improved SG&A expenses |
| Income from unconsolidated operations | +17% | Strong performance from McCormick de Mexico JV, partially offset by a stronger U.S. dollar against the peso |
| Adjusted EPS | Flat at $0.69 | Operating profit and unconsolidated income gains offset by lower gross margin and a less favorable tax rate |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Tariffs and global trade cost pressure | — | Gross annualized exposure ~$90M (~$50M in-year), to be fully offset via sourcing, CCI, and surgical pricing; ~2% of global COGS subject to tariffs | Rising |
| Surgical/targeted pricing | — | Residual mitigation lever after sourcing and CCI; some tariff-related pricing to come through in Q4 | Rising |
| CCI and SG&A streamlining savings | — | Primary lever to offset commodity and tariff pressure; organizational changes in Q2 continuing through the year | Rising |
| Value-seeking and health-and-wellness convergence | — | Consumers cooking at home (86% of meals sourced at home), seeking value and health, benefiting McCormick's categories | Steady |
| China gradual recovery | — | Recovery continuing as expected over the past two quarters; consumer sales expected to improve slightly year over year | Steady |
| CPG customer volume softness in flavor solutions | — | Large CPG customers still soft, incrementally weaker than Q1, partially offset by high-growth health-and-wellness innovators | Declining |
| EMEA QSR softness from Middle East boycotts | — | Continued and softer than expected; expected to stabilize on weak prior-year comparisons | Steady |
| ERP / SAP transition | — | Pivoted from big-bang to functional deployment to de-risk; spend smoothed, no investment peak expected next year | Steady |