McCormick & Co. (MKC) - Get Report on Tuesday reported first-quarter earnings that beat Wall Street's forecast, but the spice and condiment maker fell short on sales expectations as the result in China was rocked by the "extraordinary disruption" of the coronavirus pandemic.
The Hunt Valley, Md., company also withdrew its fiscal 2020 guidance, which it released on Jan. 28.
McCormick shares at last check were off 0.9% to $141.90 in premarket trading.
For the quarter ended Feb. 29 McCormick reported net income of $1.08 a share, down from $1.11 in the year-earlier quarter. The latest adjusted earnings came to $1.08 a share, beating FactSet's consensus estimate of $1.03.
Sales totaled $1.21 billion, down 2% from a year ago and missing FactSet's call for $1.23 billion.
Consumer sales slipped 6% to $699.5 million and flavor sales rose 5% to $512.5 million. The company said the coronavirus outbreak in China, where the pandemic originated, reduced sales growth by 3%.
While withdrawing its 2020 guidance due to the uncertainty caused by the coronavirus outbreak, Lawrence E. Kurzius, chairman, president and CEO, said in a statement that "the company reaffirms its long-term financial objectives and capital allocation priorities."
"Our first quarter results were significantly impacted by the extraordinary disruption in China's consumption related to the Covid-19 outbreak," he said.
"Lower operating results from this impact offset the otherwise solid sales, operating income and earnings per share growth we delivered in the first quarter, driven by the successful execution of our strategies and engagement of employees."
Kurzius said the company expects a shift in consumer demand due to Covid-19 but cannot predict the duration and extent of the impact. Restaurants and bars are closed in many parts of the world in an effort to contain the outbreak.
The company expects consumer demand to rise during periods of pantry stocking followed by increased cooking at home.
In the flavor-solutions segment, the company is expecting increased demand from packaged-food companies, but it expects declines in demand from restaurants and other food-service customers.