McCormick (ticker: MKC), the well-known seasonings maker, experienced a decline in stock value on Tuesday following a third-quarter revenue report that fell below expectations, primarily due to struggling sales in China.
The company reported adjusted earnings of 65 cents per share on revenue totaling $1.685 billion for the third quarter. While earnings met the expectations of analysts surveyed by FactSet, revenue fell short of the consensus estimate of $1.697 billion.
CEO Brendan Foley acknowledged the impact of China's slower-than-expected economic recovery, stating, "Our results reflect strong underlying business trends that were in line with our expectations across our business, notwithstanding our Consumer segment in APAC, where the pace of China's economic recovery has been slower than anticipated."
In the third quarter, sales for McCormick's consumer segment in the Asia-Pacific region declined by 16% compared to the previous year. However, sales in the Americas and Europe, the Middle East, and Africa regions increased by 1.4% and 15% respectively.
Despite the challenges faced in China, total sales for the quarter still saw a 5.5% increase from the prior year, largely driven by an 8% price hike.
McCormick has maintained its sales and operating profit outlook for the full year.
As a result of these developments, McCormick's stock experienced a 1.8% drop in premarket trading on Tuesday, settling at $73.35. Year-to-date, the stock has declined by 9.9% in 2023.
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