Spice maker McCormick beats quarterly profit estimates on cost-saving efforts
June 26 (Reuters) - Flavoring products maker McCormick (MKC.N), opens new tab on Thursday beat Wall Street estimates for second-quarter profit, aided by the resilient demand for its higher-priced products and cost-saving initiatives.
Waning consumer confidence has led to customers opting to eat at home more than dining out, boosting sales for packaged foods companies such as McCormick despite the looming economic uncertainty.
"We are well positioned with our robust plans to mitigate current tariff related costs, fuel growth investments, and expand operating margins," CEO Brendan Foley said.
The Cholula hot sauce maker's heavy marketing and promotional investments have also brought back customers previously lost to lower-priced competitors, including private label brands.
The Hunt Valley, Maryland-based company's quarterly volumes rose 1.3%, while its prices were up 0.3% from a year ago.
McCormick plans to mitigate the additional tariff-led costs through product-sourcing strategies and cost-savings initiatives under its comprehensive continuous improvement program.
The company reaffirmed its annual forecasts, taking into consideration the 10% tariff on U.S. imported goods and an incremental 30% tariff on goods from China.
For the fiscal year, McCormick expects flat to 2% increase in sales and adjusted earnings per share of $3.03 to $3.08.
Most of its U.S. imports from Mexico and Canada are compliant with the country's trade agreement, the company said.
The spice and seasoning maker's net sales rose 1% to $1.66 billion in the quarter ended May 31, in line with estimates.
Its quarterly adjusted profit per share of 69 cents beat expectations of 66 cents, according to data compiled by LSEG.
Shares of the company were up 4% in premarket trading following the results.
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