SPARKS, Md. (AP) — Spice and flavoring maker McCormick & Co. said Tuesday that its first-quarter profit fell 3 percent as higher costs offset the benefit of raising prices.
But the results beat Wall Street's expectations, and the company reiterated its full-year outlook, sending its shares to an all-time high.
McCormick & Co. makes an array of spices and other cooking products for consumers, restaurants and food manufacturers. The cost of food ingredients has risen over the last year as global commodity prices climbed.
During the first quarter, McCormick & Co.'s costs rose 21 percent to $551.4 million, cutting into its profits. But CEO Alan Wilson said profitability should improve in 2012 because of price hikes and cost-cutting efforts.
The company affirmed its forecast that it will earn between $3.01 per share and $3.06 per share in 2012. Analysts are expecting net income of $3.04 per share, according to FactSet.
The company said that during the quarter ended Feb. 29 it earned net income of $74.5 million, or 55 cents per share, compared to $76.8 million, or 57 cents per share, a year before.
Revenue was $906.7 million, up from $782.8 million, in the same period last year.
Analysts had been expecting profit of 53 cents per share on $866.8 million in revenue, according to a survey by FactSet.
Wilson said in a statement that more than a third of the company's sales growth was driven by acquisitions in emerging markets in 2011.
The company also raised prices by 5 percent on average compared to last year's first quarter, although the size of price hikes varied by product, said Joyce Brooks, vice president of investor relations, in an interview.
McCormick & Co. will implement less significant price hikes through 2012, Brooks said. The company did not elaborate on which products will be affected.
Along with raising prices in 2012, the company said that productivity improvements should cut costs by at least $45 million during the year.
Shares of McCormick & Co. rose $1.20, or 2.3 percent, to close Tuesday at $54.22, their highest level ever.
The stock has been steadily climbing since August when the broader market tumbled. Shares have gained about 20 percent since early October.