McCormick Posts Higher 1Q Sales; Agrees to Combine With Unilever to Create Global Food Giant — Update

By Connor Hart

McCormick & Co. reported higher fiscal first-quarter profit and sales and unveiled a deal to combine with Unilever's food business, creating a sauces-to-spices company valued at more than $65 billion, including debt.

The cash-and-stock deal, disclosed Tuesday, confirmed an earlier report from The Wall Street Journal that the companies were in advanced talks.

Under the terms of the transaction, Unilever and its shareholders are expected to own about 65% of the new, combined foods business. Unilever will also receive a one-time $15.7 billion cash payment.

The combined foods business will have annual revenues of about $20 billion. It will house Unilever's brands, including Hellmann's mayonnaise and Knorr soup mixes, alongside McCormick's red-capped bottled spices and Cholula hot sauce.

McCormick Chief Executive Brendan Foley said on a call with analysts that the companies are strategically and culturally aligned organizations, and that the combination will create opportunities to execute on multiple growth levers, including expanded distribution and accelerated innovation and go-to-market strategies.

The combination is also expected to generate about $600 million in annual cost savings by year three. Marcos Gabriel, McCormick's finance chief, noted that those savings will be reinvested back into the business to help accelerate growth.

McCormick shares fell 6.4%, to $50.26, extending their almost 40% decline over the past year.

The deal came shortly after the spice maker posted a profit of $1.02 billion, or $3.77 a share, for its three months ended Feb. 28, compared with $162.3 million, or 60 cents a share, a year earlier.

Stripping out one-time items, such as a noncash gain related to its acquisition of McCormick de Mexico, earnings were 66 cents a share. Analysts polled by FactSet expected had adjusted earnings of 59 cents a share.

Net sales climbed 17% to $1.87 billion, topping the $1.79 billion that Wall Street had modeled.

On an organic basis, sales ticked up 1.2%.

Foley said the company's growth during the recent quarter was supported by its acquisition of McCormick de Mexico, as well as organic growth across both its consumer and flavor-solutions businesses.

"First-quarter total volumes were in line with our expectations, and we anticipate sequential improvement with growth building throughout the year, as we benefit from brand investments, increased innovation in both segments and distribution gains," he said.

Looking ahead, McCormick backed its outlook for net sales to grow between 13% and 17% in fiscal 2026, boosted by sustained volume growth and increased pricing benefits compared with the previous year. The company previously said its deal to acquire a controlling interest in McCormick de Mexico contributed to its sales outlook.

McCormick also reiterated its forecast for organic sales growth of 1% to 3%, and for adjusted earnings to come in between $3.05 and $3.13 a share, for the full year.

Analysts are looking for 2026 sales of $7.84 billion, which would represent a 15% increase from last year, as well as adjusted earnings of $3.09 a share.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

March 31, 2026 10:33 ET (14:33 GMT)