(Reuters) – Cholula hot sauce maker McCormick (NYSE: ) on Thursday forecast annual sales and profit below analysts’ estimates, driven by continued declines in demand for its spices and condiments, particularly in China, as well as higher marketing costs. hurt
Packaged food companies, including McCormick, General Mills (NYSE: ) and Conagra Brands (NYSE: ) have also faced declining demand across geographies as sticky inflation has forced budget-conscious customers to look for value on essentials like groceries.
Increased marketing and advertising efforts also took 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 2025, the company expects sales to be flat or up 2%, according to data compiled by LSEG, compared with analyst estimates of 2.4% growth. Sales were up 0.9% in fiscal 2024 and 4.9% in 2023.
McCormick could also be under pressure from potential import tariffs that US President Donald Trump plans to impose, as the company relies heavily on sources from China and Europe.
Shares of the Hunt Valley, Maryland-based company, which were up 11% last year, fell 1.4% in pre-market 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 to analysts’ estimates of $1.77 billion. Adjusted profit for the quarter was 80 cents per share, compared with analysts’ estimates of 77 cents.
