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October 8, 2025 • 4 min read
McCormick & Company (MKC), the global powerhouse behind the spices and seasonings in many of our kitchens, recently released its financial results for the third quarter of 2025. By diving into their latest 10-Q filing with the SEC, we can get a clearer picture of the company's performance and see how it's navigating the current economic climate. The report reveals a story of modest sales growth, with a strong consumer business balancing out some challenges in its commercial segment.
For the three months ending August 31, 2025, McCormick's net sales grew by 2.7% to $1.72 billion, up from $1.68 billion in the same period last year. This increase was driven by a combination of factors: a 1.2% rise in volume and product mix, a 0.6% benefit from pricing actions, and a 0.9% tailwind from favorable foreign currency exchange rates.
To better understand how McCormick generates its profit, the following flow diagram visualizes the company's income statement for the nine months ended August 31, 2025.
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While sales climbed, profitability faced some pressure. Gross profit dipped slightly to $645.1 million, and the company's gross profit margin—the percentage of revenue left after accounting for the cost of goods sold—decreased from 38.7% to 37.4%. The company attributed this tightening to an "unfavorable customer mix and increased conversion costs," though these were partly offset by cost savings and higher prices.
Despite the squeeze on gross margin, McCormick managed its other expenses effectively. Selling, General, and Administrative (SG&A) costs fell as a percentage of sales, helping to keep operating income stable at $288.7 million. Ultimately, net income was essentially flat at $225.5 million, leading to a slight increase in diluted earnings per share (EPS) to $0.84 from $0.83 a year ago.
McCormick's performance is best understood by looking at its two distinct business segments:
Consumer Segment: This is the familiar side of McCormick, selling spices, seasoning mixes, and condiments directly to shoppers in grocery stores. This division was the quarter's strong point, with sales growing by a healthy 3.8% to $973.2 million. Its operating income margin held steady at a robust 19.9%, demonstrating the enduring power of its brands with household consumers.
Flavor Solutions Segment: This segment provides flavorings and ingredients to other food manufacturers and food service companies. Here, growth was more subdued, with sales inching up 1.2% to $751.7 million. The operating income margin in this B2B (business-to-business) division saw a slight decline from 13.7% to 13.3%, suggesting a more challenging environment in the commercial market.
McCormick continued its long-standing practice of returning value to shareholders. The company declared a quarterly dividend of $0.45 per share, an increase from the $0.42 paid in the prior year. Additionally, the company has $419 million remaining under its current share repurchase authorization.
Interestingly, the company updated its risk factors to explicitly mention potential impacts from the "Trade policies of the U.S. presidential administration, including tariffs." This highlights how global political and economic policies can directly affect a company's operations and financial results, even for a business as seemingly straightforward as spices.
In conclusion, McCormick's third-quarter results paint a picture of a resilient company navigating a mixed economic landscape. The strength of its consumer-facing brands is a significant advantage, driving growth and stable profits. However, the slight margin compression and slower growth in the Flavor Solutions segment indicate areas to watch. As the company moves forward, its ability to manage costs, innovate its product mix, and adapt to global trade dynamics will be key to its continued success.
Last updated: October 8, 2025