HUNT VALLEY, MD. — Weak volume performance impacted McCormick & Co.’s performance during the third quarter of fiscal 2023. The results sent the company’s stock price tumbling from $74.72 per share at the market close on Oct. 2 to $68.40 at the close on Oct. 3, the day the company published its results.

Sales growth of 6% during the quarter masked underlying volume challenges. On a constant currency basis sales rose 8% due to pricing actions, according to the company, but were offset by a 2% volume/mix decline. The company said items affecting volume performance included slow economic recovery in China, the divestiture of the Kitchen Basics business, the exit of the consumer business in Russia and the discontinuation of some low margin business.

Net income for the quarter ended Aug. 31 was $170.1 million, equal to 63¢ per share on the common stock, down 23% from the same period of the previous year when the company earned $222.9 million, or 83¢ per share.

Quarterly sales rose to $1.68 billion from $1.59 billion the year before.

“Our results were in line with our expectations across our business, notwithstanding challenges for our Consumer segment in Asia Pacific or APAC, where the pace of China’s economic recovery has been slower than previously anticipated,” said Brendan M. Foley, president and chief executive officer, during an Oct. 3 conference call with securities analysts.

In the company’s Consumer segment, sales ticked up to $937.1 million from $927.9 million the year before, and the business unit’s operating income fell to $173.3 million from $183.7 million. Segment sales increased 1%, with pricing contributing 5% and volume declining 4%. The lower volume includes a 2% decline attributable to the China Consumer business as well as a 2% decline attributable to the Kitchen Basics divestiture, according to the company.

Flavor Solutions segment sales rose 12% to $747.6 million from $667.7 million. Operating income during the quarter rose to $77.8 million from $54.9 million the year before. Pricing contributed 11% to the sales gain while volume contributed 1%.

“The third quarter marks our 10th consecutive quarter with double-digit constant currency sales growth,” Mr. Foley said. “Our growth was led by pricing actions in all three regions. We are priced to cover current year inflation and are continuing to recover the cost inflation our pricing lagged the last two years.”

Looking ahead, Mr. Foley said the recovery in China also will affect McCormick’s fourth-quarter results.

“China’s growth … is expected to be less than originally anticipated, which when combined with its year-to-date performance, has led to a lower full-year 2023 benefit than we originally expected,” he said.

Michael R. Smith, chief financial officer, added, “At the top line, we continue to expect 5% to 7% growth, and anticipate our results will be closer to the middle of our guidance range given the lower-than-expected China recovery. The wrap of last year’s pricing actions as well as the impact of new ones in ‘23 are the primary drivers of growth.”

Volume growth will continue to be impeded during the fourth quarter.

“Several factors are expected to impact our volume and product mix for the year, including price elasticities that are consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment,” Mr. Smith said. “The divestiture of our Kitchen Basics business in August of last year and the exit of our consumer business in Russia during last year’s second quarter, and the continual pruning of lower-margin business from our portfolio.