Jan 22 (Reuters) - Hot sauce maker McCormick on Thursday forecast fiscal 2026 profit below analysts' estimates, as higher costs from tariffs and commodities squeeze margins amid macroeconomic uncertainty.
Shares of the company, which also missed fourth-quarter profit estimates, were down about 5% in premarket trading.
Persistent inflation and uncertainty due to the Trump administration's volatile policies have rendered U.S. consumers budget conscious making them seek cheaper options, posing a challenge to packaged food demand.
The Cholula hot sauce maker's margin has been under pressure from higher commodity costs, tariffs, and investments on production facilities and brand marketing.
"Global trade dynamics continue to create headwinds and we are facing elevated costs for the year", CEO Brendan Foley said in a statement.
Consumer preferences have also been impacted by healthier options amid the "Make America Healthy Again" movement, and increased adoption of GLP-1 or weight-loss drugs.
McCormick's move to take a controlling stake in McCormick de Mexico, part of its expansion behind the Cholula hot sauce brand, has broadened the company's global reach while also increasing its exposure to tariff risks.
The company expects annual adjusted profit to rise in the range of 2% to 5%, below estimates of an about 7% rise. This translates to between $3.05 to $3.13 per share for the year, compared with analysts' estimates of $3.22 per share, according to data compiled by LSEG.
The Hunt Valley, Maryland-based company reported an adjusted profit of 86 cents per share for the quarter ended November 30, compared with estimates of 88 cents per share.
The company also reported a fall in adjusted gross profit margin by 120 basis points.
Net sales rose 3% to $1.85 billion, but was in line with expectations.
For full-year 2026, McCormick expects to grow sales by 12% to 16% in constant currency, compared to analysts' estimate of a 7.5% rise.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Shailesh Kuber)
