McCormick has beaten market expectations in first-quarter sales and profit as consumer demand for high-priced spices held despite inflation.
The results were published on Tuesday and sent the company’s shares up nearly 9%.
Demand for hot sauces and other condiments from the brand remained steady as McCormick increased promotional offers.
The company also took measures to shrink price gaps between its branded products and private label, slowing the pace of volume decline in the process.
Prices for the products rose 5% last quarter, with volumes falling 3% in the same period.
This quarter, prices rose 3% and volumes declined by just 1%.
Chief executive Brendan Foley said in a post-earnings call that the company expects volume trends to continue to improve during the year.
Foley added that McCormick expects to drive volume during the second half of the year.
Unlike peers such as Kraft Heinz and International Flavors & Fragrances whose volumes were impacted by price hikes, McCormick saw its first-quarter sales increase.
It also posted net sales of $1.60 billion. This was above analysts’ average estimate of $1.56 billion, according to the London Stock Exchange Group.
Gross profit margin for the quarter grew by 140 basis points to 37.4% from last year. This was helped by cost-saving programmes and pricing actions.
McCormick reported adjusted earnings per share of 63 cents in the quarter ending 29 February.
This fell above analysts’ average estimate of 58 cents per share.
The Maryland-based company also reiterated its annual forecast in light of the news.
