Shares of McCormick & Co. Inc. MKC rose 1.3% in premarket trading Tuesday, after the flavor and spices company reported fiscal first-quarter profit that declined but beat expectations, as sales rose to a record amid strength in the flavor business and as pricing increases offset a decline in volume. Net income for the quarter to Feb. 28 fell to $139.1 million, or 52 cents a share, from $154.9 million, or 57 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 59 cents beat the FactSet consensus of 50 cents. Sales grew 2.8% to $1.57 billion, above the FactSet consensus of $1.55 billion, as consumer segment sales fell 1.8% to $909.5 million and flavor solutions sales jumped 10.0% to $656.0 million. When excluding the impact of currency fluctuations, sales growth reflected an 11% increase in pricing, to offset a 2% decline in volume, which resulted from the divesting of the Kitchen Basics business, lower sales to China given COVID-related disruptions and from the exit of the consumer business in Russia. Gross margin contracted to 36.0% from 36.8%, as higher cost inflation and other supply chain costs were partially offset by higher prices and cost savings. For fiscal 2023, the company expects adjusted EPS of $2.56 to $2.61, which surrounds the FactSet consensus of $2.57. The stock has dropped 11.0% over the past three months through Monday, while the S&P 500 SPX has gained 5.1%.
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