The Numbers
McCormick & Company (NYSE: MKC) reported fiscal third-quarter net sales of $2.0 billion, a 17.4% increase from the year-ago period, with organic sales growth of 1.9% driven primarily by pricing. The McCormick de Mexico acquisition, which closed January 2, 2026, contributed 14.6 percentage points to reported sales growth, making it the dominant driver of the headline figure. Currency provided a 0.9% tailwind.
Gross profit margin expanded 190 basis points year-over-year to 39.3%, with the adjusted figure up 180 basis points to the same level. Adjusted operating income rose 22.1% to $359 million, while adjusted operating income margin improved 70 basis points to 17.7%. Adjusted diluted earnings per share came in at $0.86, a penny above the year-ago $0.85. On a reported basis, EPS fell sharply to $0.36 from $0.84, with $0.50 per share of special charges — including $141.5 million in transaction and integration costs and a $43.1 million noncash impairment tied to a development-stage pepper sourcing project in Malaysia — depressing the GAAP result.
Segment Breakdown
The Consumer segment posted reported net sales of $1.215 billion, up 24.9%, though organic growth was a modest 1.1% as a 2.2% pricing benefit was partially offset by a 1.1% volume and mix decline. Flavor Solutions — the segment most relevant to commercial foodservice operators and food manufacturers — delivered $809 million in net sales, up 7.7%, with organic growth of 3.0% supported by both price (2.2%) and volume/mix (0.8%). Flavor Solutions adjusted operating income climbed 18% to $117 million. For foodservice supply chain professionals, APAC Flavor Solutions stood out with 8.3% organic growth, underscoring demand momentum in that region.
Margin expansion was supported by McCormick's Comprehensive Continuous Improvement (CCI) program, which offset higher commodity and freight costs — two persistent pressure points for the broader food and beverage supply chain. SG&A increased meaningfully, reflecting acquisition-related costs, brand marketing investment, and technology spending, all of which are expected to continue into fiscal year-end.
Unilever Foods Deal & Outlook
McCormick reaffirmed its fiscal 2026 guidance, projecting reported net sales growth of 13% to 17%, adjusted operating income growth of 16% to 20%, and adjusted diluted EPS of $3.05 to $3.13. Organic sales growth is expected in the 1% to 3% range on a constant-currency basis, with McCormick de Mexico contributing 11 to 13 percentage points to the reported figure.
The pending combination with Unilever's Foods business remains the most consequential strategic development for McCormick's long-term positioning in the global foodservice ingredients market. The deal, announced in March 2026, would create a flavor-focused enterprise with approximately $20 billion in combined fiscal 2025 revenue and a 21% operating margin. McCormick expects mid- to high-single-digit adjusted EPS accretion within the first twelve months post-close and mid-to-high-teens accretion by Year 3. Anticipated run-rate cost synergies total approximately $600 million annually, net of growth reinvestments, with roughly two-thirds targeted for delivery by Year 2. Integration planning has mobilized more than 200 employees across 20 cross-functional teams, and regulatory filings are on schedule across jurisdictions. The transaction is expected to close by mid-2027, subject to regulatory approvals.
Written by Michael Politz, Author of Guide to Restaurant Success: The Proven Process for Starting Any Restaurant Business From Scratch to Success (ISBN: 978-1-119-66896-1), Founder of Food & Beverage Magazine, the leading online magazine and resource in the industry. Designer of the Bluetooth logo and recognized in Entrepreneur Magazine's "Top 40 Under 40" for founding American Wholesale Floral, Politz is also the Co-founder of the Proof Awards and the CPG Awards and a partner in numerous consumer brands across the food and beverage sector.
