Driven primarily by higher sales, McCormick & Co. Inc.'s second-quarter revenue, profit and earnings per share set records, the company reported yesterday, but it warned that third-quarter earnings will be lower than expected.

Net income for the three months that ended May 31 rose 26 percent to $33.6 million, or 24 cents a share. In the corresponding quarter last year, profit was $26.6 million, or 21 cents a share, excluding good will.

"All in all, I think the earnings were pretty much in line with what people were expecting," said Art Cecil, who covers McCormick for T. Rowe Price Associates Inc. in Baltimore. "I think [Chairman and chief executive] Bob Lawless has done an absolutely superb job in managing the business for as long as he's been in charge."

Sales for the quarter rose 4 percent, from $531 million to $553 million.

The largest percentage increase was in the consumer business, with a 5.6 percent sales increase to $245 million. The industrial business, which provides flavorings and spices for restaurants and food manufacturers such as McDonald's and Rold Gold pretzels, posted a 4.4 percent sales increase to $261 million. Sales at McCormick's packaging business fell 6.1 percent to $46 million.

The Sparks-based company said its earnings per share would have been 2 cents higher if not for the poor performance of a brokerage McCormick owns in England. Customer service at the brokerage, which sells products to retailers, was outsourced at the end of last year with disappointing results. That function has been moved back in-house, Lawless said.

"It was a one-time event that caused us problems in the second quarter but it's behind us now," he said.

Earnings per share in the second quarter were reduced 1 to 2 cents because retailers stocked up on products in the first three months of the year in order to beat a price increase that took effect at the end of the first quarter. However, earnings were boosted 2 cents to 3 cents in the second quarter because customers also bought extra products before McCormick switched its supply-chain management system.

"There have been a number of instances where companies got into difficulty and ran out of stock to provide to customers, so they were buying forward to protect themselves," Lawless said. "Nothing happened, by the way, but it created sales in advance that will bring softness in the third quarter."

Expenses related to the company's new supply-chain management system, along with the brokerage troubles, left McCormick officials predicting that third-quarter earnings per share will be 24 cents or 25 cents. The average analyst expectation was 29 cents for the quarter.

But McCormick said it is on track to meet its goals for this year: sales growth of 4 percent to 6 percent, gross profit margin gains of 50 to 75 basis points and an increase in earnings per share of 9 percent to 11 percent.

For the first half of the year, sales are up 4 percent, gross profit margin is up 130 basis points and earnings per share grew 9 percent.

Shares of McCormick closed down 71 cents yesterday at $24.89.