Spice and condiments supplier McCormick is making “strong progress” planning the integration of the Unilever foods business, the US group said today in a Q2 trading update.
It remained confident in delivering the expected strategic and financial benefits once the $66bn (£49.8bn) combination, agreed earlier this year, is completed.
The deal – forecast to close sometime in mid-2027 – brings together McCormick brands such as Cholula and Frank’s with Unilever’s Hellmann’s and Knorr, and will create a “global flavour powerhouse” with annual revenues of $20bn.
McCormick CEO Brendan Foley said today, in a statement accompanying results for the group’s second quarter, that integration planning for the proposed combination with Unilever Foods was “advancing”.
“This transformative combination accelerates our growth strategy and reinforces our continued focus on flavour,” he added. “It creates a diversified flavour leader with a robust growth profile that remains differentiated by its focus on flavouring calories while others compete for them. Our teams are working with focus and discipline to ensure we are well positioned to realise the anticipated strategic and financial benefits after the close.”
The newly combined group is expected to generate about $600m in annual synergies, which can be used to drive growth, with the management teams of McCormick and Unilever Foods currently working on how to deliver the savings as part of their integration planning.
Read more: Is McCormick a good fit for Unilever food brands?
McCormick said it expected to reach several key transaction milestones in the coming months, with the European location for the secondary listing of its shares to be announced by the end of July. By the end of September, the company will also share further details on the operating model and cost and growth synergies.
Results for McCormick’s second quarter to 31 May outperformed analyst expectations as hard-up US consumers bought its range of spices, seasonings and sauces as they stayed home and cooked more rather than eating out.
It registered organic revenue growth of 1.7% during the quarter, which was driven by price increases rather than volumes, which fell 0.5%.
Net sales jumped by 16.7% to $1.9bn, with 2.7% coming from favourable exchange rates and another 12% from its acquisition of a controlling interest in a joint venture in Mexico, with the rest from organic growth.
More than half of McCormick’s sales are generated in its domestic North American market, where relentless inflation and economic challenges in the wake of President Donald Trump’s policies for tariffs and war in Iran have led consumers to pull back spending. The conditions have benefitted the likes of McCormick as consumers dine at home to save cash.
McCormick’s consumer division, which supplies hot sauce brands Cholula and Frank’s, French’s mustard and Old Bay herbs and spices, increased organic sales by 1% to $1.1bn, with a 3% price rise offset by a 2% decline in volumes. Meanwhile, the B2B flavours arm registered a 3% organic rise in sales to $794m, driven equally by price and volume.
Group operating profits jumped from $246m a year ago to $276m.
“Second-quarter results demonstrate the continued strength and resilience of our business in a dynamic operating environment,” Foley said.
He added the company effectively managed elevated inflation and incremental costs related to the Middle East conflict through productivity initiatives and cost-saving programmes, resulting in underlying margin improvement for the quarter.
“Looking ahead to the rest of the year, we expect to sustain the momentum in flavour solutions and increase reinvestment to improve consumer volume trends and organic sales. Our enhanced margin profile and operational rigor position us well to deliver a virtuous cycle of growth through continued investment in our brands, capabilities, and innovation that drive long-term value creation. Our fundamentals remain strong, supported by our advantaged categories and disciplined execution, giving us confidence in our ability to deliver on our 2026 outlook.”
Shares in McCormick rose 5% as markets opened in New York on the back of the better-than-expected results. The stock reacted badly to the Unilever deal as investors struggled with the logic of the deal, with share prices down around 35% in the months following the March announcement.
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