HUNT VALLEY, MD. — Consumers are cooking at home more and will be for the foreseeable future — a trend that is benefiting business at McCormick & Co. Inc. in the midst of the global crisis caused by the coronavirus (COVID-19).

“We’re seeing increased consumer consumption, both through our scanner data and e-commerce as well as through customer orders, including those from packaged food companies in our flavor solutions segment,” said Lawrence E. Kurzius, chairman, president and chief executive officer, during a March 31 earnings call. “While this increase is impacted by short-term pantry stocking, we expect some level of elevated demand for at-home cooking to continue. Schools are closed, people are staying at home, and that contributes to real incremental at-home consumption.

“We also know from our sales performance during recessionary periods, we benefit from consumers eating at home. Our constant currency total consumer segment organic sales growth in 2001 and 2009 was 4% and 3%, respectively.

“On the other hand, in the away-from-home part of our flavor solutions segment, which represents approximately 20% of our total company sales, we are now seeing reduced demand from our foodservice customers as COVID-19 measures have eliminated dining-in services and limited restaurants to carry-out for delivery only.”

The company’s first-quarter results were negatively impacted by the spread of COVID-19 in China. The disruption there resulted in a 3% reduction in total company first-quarter sales, Kurzius said.

“The events in China during the second half of the quarter were extraordinary,” Kurzius said. “While total McCormick sales follow a seasonal pattern with the first quarter generally the lightest, the first quarter is typically our peak season in China. Additionally, over half our China business relates to away-from-home consumption. And Hubei Province is one of our most highly developed regions due to the DaQiao brand being founded and made in Wuhan. This made the China lockdown with an extended lockdown in Hubei, coupled with no opportunity for consumers to stock their pantries to be a significant impact.

“We believe we cannot use the China results to extrapolate the overall impact for the rest of the company due to differences related to lockdown durations, pantry stocking opportunities as well as the different percentages of foodservice business and other dynamics in each region.”

Net income for the first quarter ended Feb. 29 was $144.7 million, equal to $1.09 per share on the common stock, down from $148 million, or $1.12 per share, in the prior-year period. Excluding special charges, adjusted net income decreased 2.8% to $145.4 million from $149.6 million, driven by lower adjusted operating income and a higher adjusted income tax rate, partially offset by lower interest expense.

Net sales declined 2% to $1.21 billion from $1.23 billion the year before.

Operating income for McCormick’s consumer segment, excluding special charges, declined 12% to $120 million, while sales fell 6% to $699.5 million when compared to the year-ago quarter. The sales decline primarily was driven by the impact of the COVID-19 outbreak in the Asia/Pacific region. Consumer sales in the Americas declined 2%, reflecting trade inventory reductions, partially offset by underlying volume growth from new products, expanded distribution, brand marketing support and pricing.

Operating income in the flavor solutions segment, excluding special charges, advanced 19% to $76 million, while segment sales grew 5% to $512.5 million. Flavor solutions sales in the Americas increased 6%, driven by new products and base business growth with continued momentum in snack seasoning and branded foodservice, according to the company.

Like others in the industry, McCormick & Co. has increased compensation for on-site workers while implementing travel restrictions, visitor protocols and social distancing practices. Most employees are working remotely where possible. Kurzius said the company continues to operate without significant disruption to the supply chain.

“Our 2020 plan includes to further drive our undisputed leadership in spices and seasonings, accelerate our condiment global platform and fuel our growth in emerging markets and channels as well as in on-trend, fast-growing platforms,” Kurzius said. “We’re strengthening our connection with the consumer, especially with digital, e-commerce and social media outreach, which is even more important today with consumers at home more and looking for solutions.

“Simply put, our consumer portfolio and plans are even more relevant today than they were before. We are seeing an incredible surge in demand from consumers stocking their pantries and cooking at home as our other consumer packaged companies. For example, for the week ended March 15, scanner sales for the total McCormick US branded portfolio grew 65%, with all major categories up double or triple digits. While we expect consumption will not continue at this extraordinary level, we do expect sustained growth from an increase in consumers cooking at home.”