McCormick reported 8% sales growth in the second quarter from the year-ago period, or 10% in constant currency.
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Constant currency sales growth reflected an 11% increase from pricing actions partially offset by a 1% volume and mix decline.
Included in the volume decline is a net 1% increase from lapping prior year COVID-related disruption in China, the Kitchen Basics divestiture, and the exit of the Consumer business in Russia.
It also includes a 1% volume decline from the Company's strategic decisions to discontinue low margin business.
Gross profit margin expanded 310 basis points versus the second quarter of last year.
This expansion was driven by pricing actions, favorable product mix, and cost savings led by the Company's Comprehensive Continuous Improvement (CCI) and Global Operating Effectiveness (GOE) programs partially offset by cost inflation.
Selling, general, and administrative expenses increased from the year-ago period driven by an increase in employee incentive compensation expense as well as higher distribution costs partially offset by CCI-led and GOE cost savings.
Operating income increased to $222 million in the second quarter of 2023 compared to $157 million in the second quarter of 2022.
Excluding special charges, as well as integration expenses in 2022, adjusted operating income increased 35% to $235 million in the second quarter of 2023 compared to $174 million in the year-ago period.
In constant currency, adjusted operating income increased 36% from the year-ago period driven by the favorable impact of higher sales and gross margin expansion partially offset by higher selling, general, and administrative expenses.
Earnings per share was $0.56 in the second quarter of 2023 compared to $0.44 in the year-ago period.
Special charges, as well as integration expenses in 2022, lowered earnings per share by $0.04 in both the second quarter of 2023 and 2022.
Excluding these impacts, adjusted earnings per share was $0.60 in the second quarter of 2023 compared to $0.48 in the year-ago period.
This 25% increase was driven by higher adjusted operating income partially offset by higher interest expense and a higher adjusted effective tax rate.
Net cash provided by operating activities through the second quarter of 2023 was $394 million compared to $154 million through the second quarter of 2022.
The increase was primarily driven by higher net income and working capital improvements, including lower inventory, as well as lower incentive compensation payments. ■