Spice maker McCormick & Co. reported Tuesday a 3 percent decline in its first-quarter profit, hurt by higher material costs.
Net income for the three months ending Feb. 29 was $74.5 million, or 55 cents per share, compared with $76.8 million, or 57 cents per share, in the corresponding period last year.
Sales rose 16 percent to $906.7 million, up from $782.8 million, with increases in the company's consumer and industrial businesses. The Sparks company said recent acquisitions in emerging markets completed last year drove a third of its sales.
But operating costs also went up by double digits from $454.6 million to $551.4 million in the most recent quarter – reducing the company's gross profit margin.
In response to higher material costs, the company raised prices on products, which increased sales by 5 percent.
While the company expected the lower profit margin due to the higher material costs, McCormick Chairman and Chief Executive Officer Alan D. Wilson said in a statement the company's earnings were nonetheless "slightly" ahead of its guidance due to "our underlying strength in sales."
"In an environment where consumers in many markets are confronted with a tough economy and higher prices, we were pleased to achieve increased volume and product mix," Wilson said.
McCormick is scheduled to hold its annual shareholder meeting Wednesday.