Cholula maker McCormick predicts brisk annual sales, profits on declining demand, rising costs.

(Reuters) – Cholula hot sauce maker McCormick on Thursday reported annual sales and profits below analysts’ estimates, affected by a steady decline in demand for its spices and condiments, particularly in China, and high market costs.

Packaged food companies, including the McCormick, General Mills and Conagra brands, have also seen declining demand across geographies as sticky inflation forces budget-conscious consumers to save on even essentials like groceries.

Increased marketing and advertising efforts negatively impacted the company’s profit prospects, with expenses increasing by 2.3% in the fourth quarter. McCormick now projects annual adjusted profit growth from 3% to 5%, down from 6.5%, according to data compiled by LSEG.

For the 2025 fiscal year, the company expects sales to be flat or up 2 percent, compared with analysts’ estimates of a 2.4 percent increase, according to data compiled by LSEG. Sales are expected to increase 0.9 percent in fiscal 2024 and 4.9 percent in 2023.

McCormick could face pressure from U.S. President Donald Trump’s plans to impose tariffs, as the company relies on ingredients from China and Europe.

The Hunt Valley, Maryland-based company, which was up 11 percent last year, fell 1.4 percent in premarket trading.

However, McCormick reported on November 30 a narrow beat for sales and profit in the fourth quarter, despite a 6.9% decline in sales in the Asia-Pacific region, which includes its operations in China.

The company posted net sales of $1.8 billion for the quarter, compared to analysts’ estimates of $1.77 billion. Adjusted profit for the quarter was 80 percent above analysts’ estimates of 77 cents.

(Reporting by Neil J Kanath in Bengaluru; Editing by Krishna Chandra Elluri)