(Reuters) – McCormick & Co Inc beat first-quarter sales and profit expectations on Tuesday as the Cholula sauce maker benefited from multiple prices increases.
Shares of the company, which reiterated 2023 sales and profit forecast, rose 1.6% to $75.24 in premarket trading.
The Maryland-based food company had been raising prices of its products, including spices, blends, and seasonings to help offset costs pressure from pandemic-induced supply chain disruptions and higher labor charges.
The company’s gross margins dropped 80 basis points to 36% in the first quarter ended Feb. 28, lesser than the 380 points decline in the fourth quarter.
Demand for the spice maker’s products remained resilient during the quarter as consumers preferred cooking at home since it was significantly cheaper than dining out.
The company’s sales rose about 3% to $1.57 billion in the quarter, beating analysts’ average estimate of $1.54 billion, according to Refinitiv data.
McCormick said about 2% of its sales growth was affected by the divestiture of its Kitchen Basics business, the exit of its consumer business in Russia and COVID-19-led China shutdowns.
On an adjusted basis, McCormick earned 59 cents per share, beating analysts’ estimates of 51 cents per share.
The company said it expects higher growth in its consumer segment from the current quarter as it laps the impact from the exit of the segment in Russia and COVID-19 shutdowns in China.
McCormick said in February it plans to increase automation that could see a 10% reduction in its Americas supply chain workforce, in an effort to bring down costs.
(Reporting by Anne Florentyna Gnanaraja Sekar in Bengaluru; Editing by Shweta Agarwal)