McCormick & Company Inc (NYSE:MKC) stock rose 1.59% (As on January 27, 11:48:30 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the fourth quarter of FY 22.

MKC in the fourth quarter of FY 22 has reported the adjusted earnings per share of 73 cents, missing the analysts’ estimates for the adjusted earnings per share of 86 cents, according to Zacks Investment Research. The company had reported 2 percent decline in the adjusted revenue to $1.7 billion in the fourth quarter of FY 22, missing the analysts’ estimates for revenue of $1.76 billion. It reflects 2% sales growth in constant currency. Constant currency sales growth reflected a 9% increase from pricing actions partially offset by a 3% volume decline from the Kitchen Basics divestiture, lower China consumption due to COVID-related restrictions and the exits of a low margin business in India and the Consumer business in Russia, as well as a 4% decline in all other volume and product mix. Sales grew at a constant currency three-year compounded annual growth rate (CAGR) of 5% for the total Company off of a pre-pandemic baseline of 2019. The three-year constant currency CAGR’s for the Consumer segment and the Flavor Solutions segment were 3% and 9%, respectively.

McCormick expects full-year earnings to be in the range of $2.56 to $2.61 per share. Analysts expect normalized EPS of $2.90. For fiscal year 2023, McCormick expects to increase year-on-year sales by 5% to 7%. The Company expects to grow operating income by 10% to 12%. Adjusted operating income is expected to increase 9% to 11%.

McCormick expects strong underlying business performance in 2023 driven by sales growth. The Company also expects a favorable impact to operating income from its Global Operating Effectiveness Program and the lapping of the negative impact of the COVID-related disruptions in China in 2022, partially offset by the Kitchen Basics divestiture and an expected increase in employee incentive compensation expenses given the expected improvement in underlying business performance. In addition, the Company expects earnings per share growth will be tempered by higher interest expense and a higher projected effective tax rate compared to 2022. Excluding this interest and tax headwind, McCormick’s operating performance growth is expected to be strong. The Company expects minimal impact on net sales, operating income, and earnings per share from currency rates in 2023.