McCormick & Co. beat earnings estimates in its third quarter while continuing to struggle with supply chain challenges, the Hunt Valley-based spice maker said Thursday.
Last month, the company warned of a weaker-than-expected third quarter marked by supply chain issues and the impact of inflation on consumer spending.
Sales during the quarter ended Aug. 31 increased 3% to $1.59 billion from $1.54 billion in the third quarter of 2021, which included an unfavorable impact from the sale of the company’s Kitchen Basics business. Analysts expected sales of $1.59 billion, according to Zacks Consensus Estimate.
Sales reached a record level, reflecting the strength of the brand’s global portfolio “against the backdrop of a volatile operating environment,” McCormick Chairman and CEO Lawrence E. Kurzius said in Thursday’s announcement.
Earnings rose to 82 cents per share, compared with 79 cents per share in the quarter a year earlier.
On an adjusted basis, earnings were 69 cents per share, compared with 80 cents per share in the third quarter of 2021. That beat analysts’ estimates of 65 cents per share, according to Zacks.
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McCormick reiterated that it faced supply chain challenges during the third quarter, as it took longer than expected to obtain some supplies.
The spice maker said it plans to aggressively eliminate supply chain inefficiencies over the coming months and capitalize on consumer trends that have accelerated since the start of the pandemic, such as a shift to cooking more at home.
The manufacturer reaffirmed a financial outlook it had given when it released preliminary earnings last month. Sales for the year are expected to range from similar to 2021 to up 2%, instead of the previously expected 3% to 5% increase.
And earnings are expected in the range of $2.64 to $2.69 per share, compared with $2.80 each in 2021. On an adjusted basis, the company expects earnings in the range of $2.63 to $2.68, as compared with previously reported guidance of $3.03 to $3.08.
McCormick said strong sales to consumers through retailers in the third quarter were tempered by the sale of the Kitchen Basics business and by discontinuing a low margin business in India and sales to consumers in Russia.
“We continue to actively respond to changes in consumer behavior that are a result of broad pressure on the cost of living from inflation,” Kurzius said in the announcement.
This story will be updated.
