(Reuters) – Cholula hot sauce maker McCormick (NYSE:) forecast annual sales and profit below analysts’ estimates on Thursday, hurt by a persistent slump in demand for its spices and condiments, especially in China, as well as higher marketing expenses.
Packaged food companies including McCormick, General Mills (NYSE:) and Conagra Brands (NYSE:) have also faced slowing demand across geographies as sticky inflation has compelled budget-conscious customers to hunt for value even for essential items such as groceries.
Increased marketing and advertising efforts have also taken a toll on the company’s profit expectations, with costs rising 2.3% in the fourth quarter. McCormick now projects annual adjusted profit to grow 3% to 5%, below expectations of 6.5%, according to data compiled by LSEG.
For fiscal year 2025, the company expects sales to be flat or grow as much as 2%, compared with analysts’ estimate of a 2.4% rise, according to data compiled by LSEG. Sales had risen 0.9% in fiscal 2024 and 4.9% in 2023.
McCormick could also be under pressure from the potential import tariffs which U.S. President Donald Trump plans to impose, as the company relies heavily on ingredients sourced from China and Europe.
Shares of the Hunt Valley, Maryland-based company, which were up 11% last year, fell 1.4% in premarket trading.
McCormick, however, reported a narrow beat for sales and profit in the fourth quarter ended Nov. 30, despite a 6.9% decline in sales in the Asia-Pacific region which includes its operations in China.
The company posted net sales of $1.8 billion for the quarter, compared with analysts’ estimates of $1.77 billion. Adjusted profit was 80 cent per share for the quarter, compared with analysts’ estimates of 77 cents.
