McCormick & Co.’s sales rose 3% in the first quarter, but profits were squeezed by inflation and supply chain challenges.
Sales rose to $1.5 billion in the three months that ended Feb. 28, compared with $1.48 billion in the first quarter of 2021. The Hunt Valley-based spice maker reported earning $154.9 million, or 57 cents per share, compared with $161.8 million, or 60 cents each, in the first quarter of 2021.
“As we anticipated, in the first quarter, the profit driven by our sales growth was more than offset by higher inflation and broad-based supply chain challenges,” said Lawrence E. Kurzius, McCormick chairman, president and CEO in a statement. “We continue to operate in a highly inflationary environment and expect to fully offset cost pressures over time.”
On an adjusted basis, earnings were 63 cents per share, beating analysts’ estimates of 59 cents per share, according to Zacks Investment Research.
McCormick’s business selling to restaurants, foodservice customers and packaged food makers was strong, the company said, driven by robust demand as more people resumed eating out. Sales in that segment jumped 12%, driven by base business, new products and acquisition growth.
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Sales to consumers through retailers were down when compared to higher-than-normal demand in the same period a year earlier. But, Kurzius said, the company continued to see a shift to higher at-home consumption compared to levels before the pandemic.
“We continue to capitalize on the sustained shift to cooking more at home, increased digital engagement, clean and flavorful eating, and trusted brands,” Kurzius said.
Still, sales dipped 2% in the consumer segment, impacted by the spice maker having to raise prices to offset inflation.
Inflation cut into profit margins, despite the company having raised some prices and reigned in costs, McCormick said.
The company maintained its sales and earnings outlook for the fiscal year. The company expects a sales increase of 3% to 5%. McCormick projects earnings in the range of $3.07 per share to $3.12 per share, compared with $2.80 each in fiscal 2021.
McCormick’s stock price rose 38 cents Tuesday morning with shares trading at $98 each.
This story will be updated.
