Hershey raises earnings outlook as consumer demand for confectionery remains resilient

Hershey's North America Confectionery segment reported income of $657.1 million in the second quarter of 2023, an increase of 6.2% versus the prior year period, resulting in a segment margin of 33.0% in the quarter, an increase of 60 basis points. Gains were driven by sales growth and gross margin expansion, which more than offset higher brand and capability investments.

Confectionery segment net sales were $1,993.1 million in the second quarter of 2023, an increase of 4.4% versus the same period last year. Organic, constant currency net sales increased 4.8% as high single-digit price realization more than offset expected volume declines related to inventory timing and price elasticity.

The company’s US candy, mint and gum (CMG) retail takeaway for the 12-week period ended July 16, 20232 in the multi-outlet plus convenience store channels (MULO+C) increased 9.6%, with growth across segments and classes of trade. Hershey said its CMG share declined approximately 80 basis points due to an unfavourable category mix and increased competitive innovation.

"Our categories continue to perform well as consumer demand for great tasting snacks remains resilient across the globe​," said Michele Buck, The Hershey Company President and Chief Executive Officer. "We delivered another quarter of strong net sales growth, gross margin expansion and double-digit earnings growth, enabling us to raise our full-year adjusted earnings outlook and increase our dividend 15%. New capacity and increased brand investment should enable us to sustain this momentum in the second half as we provide consumers with even more of their favourite snacks for seasonal celebrations and expand distribution across segments and markets​."

International

Second-quarter 2023 net sales for Hershey's International segment increased 8.5% versus the same period last year to $224.8 million. Organic, constant currency net sales increased 6.2% with gains balanced across price and volume.

The International segment reported a $41.1 million profit in the second quarter of 2023, reflecting an increase of $10.4 million versus the prior year period driven by sales growth and margin expansion. This resulted in a segment margin of 18.3%, an increase of 350 basis points versus the prior year period.

Second-Quarter 2023 Financial Results Summary​

• Consolidated net sales of $2,490.3 million, an increase of 5.0%.
• Organic, constant currency net sales increased 5.0%.
• Reported net income of $407.0 million, or $1.98 per share-diluted, an increase of 29.4%.
• Adjusted earnings per share-diluted of $2.01, an increase of 11.7%.