Hershey posts Q2 sales growth after divesting Tyrrells chips and Golden Monkey candy

By Douglas Yu contact

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Hershey posts Q2 sales growth after selling Tyrrells and Golden Monkey. Pic: ©GettyImages/gsheldon
Hershey posts Q2 sales growth after selling Tyrrells and Golden Monkey. Pic: ©GettyImages/gsheldon

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Hershey has posted a net sales increase of 5.3% in Q2, reaching $1.75bn, after it recently divested Tyrrells potato chips and Golden Monkey candy brand in China.

The growth was partially driven by the company’s recent acquisition of Amplify Snacks, especially its ready-to-eat popcorn brand SkinnyPop, which grew 8.3% in sales during the period, gaining 1.2 points of marketplace share.

Hershey said the US popcorn category remains “healthy”​ with an approximately 4% annual growth. It added its snacking sales grew 0.3% for the 12-week period ending July 15.

Michele Buck, the company’s CEO, said: “We have a good visibility into second-half plans and expect both SkinnyPop and ready-to-eat popcorn category strength to sustain as we move throughout the year.

“Our expansion to participate in broader snacking will continue to be an important lever in our growth,”​ she added.

Buck noted Hershey had established Amplify Snacks as an independent division to grow its emerging and better-for-you brands. The unit also includes barkTHINS, which the company acquired in 2016.

“barkTHINS is delivering incremental consumers and occasions to our portfolio and growing approximately 35% over the latest 12 weeks,”​ she said.

‘Pressured’ confectionery category

Hershey’s confectionery business only grew 0.6% in sales during Q2 as the category was “pressure,”​ said the company.

Buck said: “This was driven primarily by competitor lapping significant innovation during the same time last year.

“Hershey’s CMG (candy, mint and gum) takeaway of -0.4% resulted in a share decline of 30 basis points [in Q2],”​ she added.

“Our core franchise grew 1.3% during this period, driven by Reese’s and Ice Breakers gum. Reese’s growth accelerated, driven by the limited rollout of Reese’s Outrageous! and additional media supporting a new campaign.”

Not ruling out M&A in emerging markets

While North America’s net sales increased by 5.6% to $1.56bn, Hershey’s international segment posted a 3.1% increase in sales, reaching $191.7m.

Buck noted the company’s revenue grew high-single digit in Mexico, and its performance in Brazil was barely impacted by domestic political unrest and a truckers' strike.

She added: “In India, our core brands, Hershey’s Sofit, Jolly Rancher and Brookside are growing over 50%. We anticipate these strong segment sales and profit trends to continue in the second half of the year.”

Meanwhile in China, where Hershey has sold Golden Monkey​, Buck said the company is optimizing its footprint to focus on its core SKUs, provinces and channels.

“Sales are stabilizing [in China]. Our core Hershey’s SKUs in targeted channels are growing share and our bottom line is improving meaningfully,”​ she said.

Asked if Hershey has similar merger and acquisition plans in these emerging markets to what it has been doing in the US, Buck said: “We’re making really good progress on our own in China and India, [but we’re] not ruling out any potential strategic partnership going forward.”

Business plans and outlook

Hershey said its new KitKat line, which includes a KitKat snack mix, is on track to start producing Q4 and will be a “key enabler of the brand’s 2019 growth.”

The company expects its full-year 2018 organic growth to be around 2%.

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