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What Drove McCormick’s Flavor Solutions Segment?

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Jul. 1 2019, Updated 11:21 a.m. ET

McCormick’s sales

McCormick’s (MKC) flavor solutions segment’s sales increased 1.0% on a YoY (year-over-year) basis to $0.54 billion, which reflected strong volume growth and a favorable product mix. Increased pricing also supported the top line. However, negative currency rates remained a drag.

The segment’s sales gained from new products, growth in organic volumes, and a favorable product mix in the EMEA region.

Excluding the impact from currency fluctuations, the flavor solutions segment’s net sales increased 4.0% on a YoY basis. The segment’s volume and mix improved 3.2%. The pricing increased 0.8% and supported the segment’s top line. Currency fluctuations impacted the net sales growth by 3.0%.

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Sales by region

McCormick’s flavor solutions segment’s sales rose 2.3% in the Americas due to higher volumes and pricing combined with the favorable product mix. The volumes and mix rose 2.2% due to increased sales to quick service restaurants and continued momentum in the flavors and seasonings category. McCormick’s expanded distribution, promotional activities, and new products supported the top line. However, the decline in the bulk ingredients category remained a drag.

The net sales in the EMEA region fell 0.8%. The company’s volume growth and increased pricing were more than offset by negative currency rates. Excluding the impact of the currency, the net sales rose 8.9%, which reflected 7.2% growth in the volumes and mix and a 1.7% increase in the pricing. Currency volatility had a negative impact of 9.7%. Increased sales to quick service restaurants and packaged food companies supported the sales growth. New products and growth in the base business drove McCormick’s top line.

McCormick’s sales in the Asia-Pacific region fell 4.1%, which reflected currency rates. The volumes and mix improved 1.5%, while the pricing increased marginally. Currency fluctuations had a negative impact of 5.7% on the region’s top-line growth.

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