By Alexander Marrow, Anuja Bharat Mistry and Shania S Thomas
Oct 1 (Reuters) - McCormick reported higher quarterly sales and profit on Thursday, as pricier seasonings and sauces helped cushion the blow from weaker consumer demand due to elevated gas prices and a cyclospora outbreak that dented volumes.
Net sales grew at their fastest pace since 2021, by the McCormick de Mexico acquisition, lifting the spice maker's shares about 4% in premarket trading. The stock has fallen nearly 32% so far this year.
Packaged goods makers such as McCormick, Conagra Brands and General Mills have leaned on price hikes to shield margins as they counter challenges from uncertainty over US tariffs and surging input costs tied to the Middle East conflict.
"In the US, higher gas prices and the cyclospora outbreak have added pressure and contributed to softer traffic across foodservice and grocery channels," CEO Brendan Foley said in prepared remarks.
Cyclospora is a foodborne parasite that has sickened thousands of Americans this summer. McCormick said the outbreak had mainly impacted fast-food restaurants.
For the quarter ended August 31, McCormick's prices were up 2.2% from a year ago, while organic volumes dipped 0.3%. Its volumes fell 0.5% in the previous quarter.
Volumes in McCormick's major Consumer Americas division fell 2.5% in the quarter, the only segment to post a decline.
"The more gradual than anticipated volume recovery in Consumer Americas will likely remain top of mind for investors," Barclays analysts said in a note.
The company maintained its annual forecasts for the third time this fiscal year as it navigates an uncertain consumer spending environment.
McCormick said integration planning for the proposed $65-billion merger with Unilever's foods business was on track and remained confident that the deal will deliver significant earnings-per-share accretion after closing.
The company reported third-quarter sales of $2.02 billion, compared with analysts' estimates of $1.98 billion, according to data compiled by LSEG.
Its quarterly adjusted profit came in at 86 cents per share, beating estimates of 76 cents.
(Reporting by Shania S Thomas and Anuja Bharat Mistry in Bengaluru and Alexander Marrow in London; Edited by Diti Pujara)
