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McCormick & Company (NYSE:MKC) reported sales fell 1.2% year-over-year to $1.64 billion in Q2, with minimal impact from currency. The decline includes the impact of the company’s strategic decision to divest a small canning business and reflects a 1% volume decline attributable to lower customer demand and the timing of customer activities in the company’s Flavor Solutions segment, which more than offset volume growth in the consumer segment.
Gross profit margin expanded 60 basis points during the quarter. The expansion was driven by cost savings led primarily by the company’s Comprehensive Continuous Improvement program. Adjusted operating income was $236 million, vs. $235 million a year ago. Adjusted EPS was $0.69 to top the consensus mark of $0.59 and the $0.60 reported a year ago.
Net cash provided by operating activities through the second quarter was $302 million, compared to $394 million a year ago. The year-over-year decline was primarily driven by higher incentive compensation payments and the timing of cash tax payments.
CEO Brendan Foley noted that the investments the company made in its consumer segment drove substantial sequential volume improvement in the quarter, leading to volume growth. “We expect continued momentum for the second half of the year,” he added. McCormick (MKC) expects that collaboration and strong innovation pipeline with customers will drive improved volume performance in the second half of the year.
Looking ahead, McCormick (MKC) sees full-year EPS of $2.76 to $2.81 vs. $2.86 consensus and a prior outlook of $2.80 to $2.85.
Shares of McCormick (MKC) edged 0.16% higher in premarket trading on Thursday.