Bitter year sours Hershey profits
quarter results today and, in a bid to reverse the downturn, vowed
to increase investment in core brands as well as pursue the new
rapidly growing niche markets of dark and premium chocolate.
Net income for the quarter fell from $170.4m (€131m) to $153.5m (€118m) and net sales dropped 0.7 per cent compared to the same period last year.
The figures reflect a tumultuous year for the group who were forced to recall 25 products after a salmonella scare hit the firm's Canadian operations in November.
Hershey CEO Richard H Lenny said: "The impact of a product recall in Canada affected both sales and profitability.
"We will reverse these trends in 2007 with a growth plan driven by a step-up in core brand investment and support of new product platforms that is clearly focused on improving both sales and profitability."
Central to the company's outlook for 2007 is building on its presence in the dark chocolate sector - one of the fastest growing businesses in the Hershey portfolio last year.
In September, Hershey introduced a new range of single origin dark chocolate products and went on to further capitalise on consumer trends by entering the organic market with the acquisition of the Dagoba chocolate company in October.
In addition to strengthening its portfolio in the dark and organic markets, Hershey, who owns the Reese's peanut butter cups brand and has a licence to sell Cadbury products in the US, hopes to boost sales through investment in core brands and growth in global markets.
The company hopes refocusing operations will put the business back on track and remain undaunted by today's pessimistic results. Hershey said it stood by long-term expectations, predicting sales growth of 3-4 per cent for the coming year.
