McCormick faces risks from foreign currency fluctuations impacting investments, transactions, and earnings. Interest rate risk exists due to fixed and variable rate debt instruments. Commodity price volatility for key raw materials (dairy, pepper, etc.) is a concern. Credit risk is present due to larger, potentially less profitable customers and some highly leveraged counterparties. The company's reliance on bank financing and the potential for bank performance issues is a risk. Changes in tax laws and interpretations could affect tax expense. The success of the company's business transformation initiative, including ERP migration, is uncertain.
Financial Upside
McCormick anticipates sales growth, with a projected 1% increase or 1% decrease in net sales in 2024. Gross profit margin is expected to increase by 50-100 basis points. Operating income is projected to increase by 9-11%. Favorable pricing actions and product mix, along with cost savings from the GOE and CCI programs, are expected to drive this growth. Income from unconsolidated operations, including McCormick de Mexico, is projected to increase significantly. Share repurchases are planned.
