Adds CEO comment in paragraphs 4-5, details in paragraphs 5-6, updates shares

By Sanskriti Shekhar

Jan 22 (Reuters) - McCormick MKC.N on Thursday forecast a weak profit for fiscal 2026 as higher costs from tariffs and commodities squeeze margins, with the hot sauce maker also expecting an incremental cost impact for the year.

Shares of the company, which also missed fourth-quarter profit estimates, were down about 5% in early trading.

The Trump administration's uncertain trade policy has led to higher commodity prices. At the same time, the company's investments in production facilities and brand marketing have pressured its margins.

"Inflation, commodity cost volatility, and the macroenvironment created incremental costs that impacted our margin," CEO Brendan Foley said on a post-earnings call.

"Approximately 50% of the incremental tariffs on McCormick items remain in place, and we continue to face related inflationary pressures."

The company expects an incremental cost impact from tariffs of about $50 million in fiscal year 2026. It said it imports some spices such as pepper as well as herbs, as of 2024.

Budget-conscious consumers are seeking cheaper options for everyday essentials, posing a challenge for McCormick, which took pricing actions to offset inflation.

The company's move to take a controlling stake in McCormick de Mexico, part of its expansion behind the Cholula hot sauce brand, has broadened the company's global reach while also increasing its exposure to tariff risks.

McCormick sees annual adjusted profit per share between $3.05 and $3.13, compared with analysts' estimates of $3.22, according to data compiled by LSEG.

The Hunt Valley, Maryland-based company reported an adjusted profit of 86 cents per share for the quarter ended November 30, compared with estimates of 88 cents per share.

Quarterly volumes in McCormick's consumer segment, a major revenue contributor, rose 1% from a year ago, although prices were up 2%.

The company also reported a fall in adjusted gross profit margin by 120 basis points.

Net sales rose 3% to $1.85 billion, but were in line with expectations.

For the full year 2026, McCormick expects to grow sales by 12% to 16% in constant currency, compared to analysts' estimate of a 7.5% rise.

(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Shailesh Kuber)

((Sanskriti.Shekhar@thomsonreuters.com))