McCormick beat market expectations for first-quarter sales and profit as consumer demand for its high-priced spices and seasonings held amid sticky inflation.
Demand for McCormick's hot sauces and other condiments remained steady as the company increased promotions, and took measures to narrow price gaps between its branded products and private label paid off, slowing the pace of volume decline.
The company's volumes for the quarter fell 1% after declining 3% last quarter, while its prices rose 3% after rising 5% in the previous quarter.
Quarterly Highlights
Unlike its peers, Kraft Heinz and International Flavors & Fragrances, whose volumes took a hit from aggressive price hikes undertaken in the previous quarters, the Cholula hot sauce maker saw its first-quarter sales rise.
The company posted net sales of $1.60 billion, compared with analysts' average estimate of $1.56 billion, according to LSEG data.
Gross profit margin for the quarter expanded 140 basis points to 37.4% from last year, helped by its cost-saving programs and pricing actions.
McCormick, which supplies to big retailers like Walmart, reported adjusted earnings per share of 63 cents in the quarter ended 29 February, compared to analysts' average estimate of 58 cents per share.
A 'Strong First Quarter'
Brendan M Foley, president and CEO of McCormick stated, "We are pleased to start the year with strong first quarter performance, which reflects the early success of our prioritised investments to drive impactful results.
"We drove sequential improvement in volumes in our consumer and flavour solutions segments. We remain confident in the sustained trajectory of our business, and in our ability to deliver on our 2024 outlook and our long-term financial objectives."
Shares of Hunt Valley, Maryland-based company, which fell nearly 17% last year, were up about 4% in premarket trading.
News by Reuters, additional reporting by ESM.
