McCormick beat market expectations for second-quarter profit and sales, led by strong demand for its spices and seasonings in Europe, Middle East and Africa.
Customers grappling with still-high costs preferred cooking at home to dining out, improving volumes across the company's consumer segment, its biggest unit.
EMEA Growth
Consumer sales in Europe, Middle East and Africa (EMEA) business rose 5%, driven by 4% increase in volumes in the quarter ended May 31, even as total sales in the segment decreased 0.8%.
The Cholula hot sauce maker's net sales fell 1% to $1.64 billion (€1.53 billion) but edged past estimates of $1.63 billion (€1.52 billion), according to LSEG data. The company cited the divestiture of its canning business as a reason for the decline.
Benefits from price hikes taken over the past quarters lifted the company's gross profit margin to 37.7%, from 37.1% a year earlier.
McCormick, which recently appointed a new finance chief, reported an adjusted profit of 69 cents per share in the quarter, compared with analysts' average estimate of 59 cents.
Shares of the Maryland, US-based company, which reiterated its annual forecasts, were marginally up before the bell.
'Well Positioned'
"As we look ahead, we will continue to prioritise our investments in key categories and execute on the initiatives within our growth levers, including brand marketing, new products and packaging, category management, and proprietary technology," commented Brendan M. Foley, President and CEO. "Notably, we expect our innovation pipeline across both segments combined with our brand marketing initiatives to accelerate our return to total volume growth.
"In addition, we remain well positioned with our cost savings initiatives to fuel investments as well as generate operating margin expansion. Our results for the first half of the year coupled with our growth plans, support our continued confidence in achieving the mid to high-end of our projected constant currency sales growth for 2024."
Additional reporting by ESM
