McCormick & Co raised its annual adjusted profit forecast, betting on price hikes and steady demand for its condiments and spices as consumers choose to cook more at home amid stubborn inflationary pressures.
The Cholula hot sauce maker, like several other US food companies, has been raising prices to weather surging input costs and other expenses due to supply chain disruptions.
The company now expects annual adjusted earnings per share between $2.60 and $2.65, compared with its previous forecast of $2.56 to $2.61 per share.
The price hikes aided McCormick's gross margins, which expanded 310 basis points in the second quarter ended 31 May.
But higher prices pushed inflation-weary consumers to trade down to cheaper alternatives. The company's overall volumes declined 1% during the period.
McCormick's consumer segment, which comprises Cattlemen's BBQ Sauce and Billy Bee honey, saw a 2% drop in volumes in the quarter.
Quarterly Performance
The company's overall net sales rose 8% to $1.66 billion (€1.5 billion) in the quarter. Analysts on average expected $1.67 billion, according to Refinitiv data.
Excluding items, the company reported a profit of 60 cents per share, compared with analysts' expectations of 57 cents per share.
The company also reaffirmed its sales forecast for the year.
Separately, McCormick said chief operating officer Brendan Foley would take over as its chief executive officer in September, succeeding Lawrence Kurzius.
News by Reuters, edited by ESM – your source for the latest A Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.
