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Hershey announces price hike on chocolate bars as company’s top line continues to improve

By Anthony Myers contact

- Last updated on GMT

Michele Buck, Hershey Company president and chief executive officer. Pic: The Hershey Company
Michele Buck, Hershey Company president and chief executive officer. Pic: The Hershey Company

Related tags: Hershey, results

After announcing that it would hike wholesale prices by 9-10% on its single-serve products, which account for roughly a third of its total sales, The Hershey Company has reported a better-than-expected quarterly profit but forecast 2019 earnings below market expectations.

Hershey updated its net sales outlook to the mid-point of the previously guided range, and slightly raised its reported and adjusted earnings outlook to the top half of the previous range for the second quarter ended June 30, 2019.

Hershey Second-Quarter 2019 Financial Results Summary

Consolidated net sales of $1,767.2 million, an increase of 0.9%.

Organic constant currency net sales increased 1.8%.

The net impact of acquisitions and divestitures was a 0.6 point headwind, and foreign currency exchange was a 0.3 point headwind.

Reported net income of $312.8m, or $1.48 per share-diluted, an increase of 37%.

Adjusted earnings per share-diluted of $1.31, an increase of 14.9%.

  •  All comparisons for the second quarter of 2019 are with respect to the second quarter ended July 1, 2018

We are pleased with our second quarter results and the momentum we are seeing behind our key initiatives for this year​,” said Michele Buck, The Hershey Company president and chief executive officer. “We continue to deliver differentiated results by growing both top and bottom line while investing in our brands and capabilities. We are on track to deliver our financial commitments for the year driven by accelerated US performance, a strengthened international business and continued operational excellence​.”

So far this year, Hershey has raised prices by 2.5% on an average to offset higher labor and raw material costs that are effecting the food and drink packaged industry as a whole.

The company expects the benefits from recent price increases to take effect next year.

We will see a dip in volume and then a year later the volume comes back, that’s how the conversion curve works​,” Buck told Reuters. “We normally have a six month delay​.”

Hershey said in conference call to media it expected full-year sales to grow approximately 2%, compared to a prior forecast of an increase of as much as 3%.

The company raised the lower end of its full-year profit forecast. It now expects full-year adjusted profit to be between $5.68 to $5.74 per share from $5.63 to $5.74, but below analysts’ expectation of $5.75 per share, Reuters reported.

Weak spot

North America, its biggest market, continues to be a weak spot, where sales rose just 0.5% to $1.57 billion in the quarter, as recent price increases hit volumes.

Hershey also posted its slowest sales growth in over a year, rising just 1% to $1.77bn, which was in line with market expectations.

Related topics: Manufacturers, Chocolate, Hershey

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3 comments

Stock

Posted by Rosemarie Prete,

Why haven't the stocks split ?

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Price hike.

Posted by Dawn Brauchle,

That's what you get for PRODUCING your product in MEXICO! Most Americans are not aware of this fact....Hershey takes your U.S. $$ for their candy and at their Park! Boycott Hershey candy and Hershey Park !

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Hershey Pricing

Posted by Edward Ey,

Strange decision by Hershey's to raise the prices of its iconic brands, especially single unit items.

Right now, Hershey's and Mars brands are displayed in check out impulse lanes in many retail outlets.
The products sit unless limited off price promotions are made available.

The Hershey and Mars brands have now become an expensive impulse purchase item for a
60 second treat. So, this space in stores may disappear and Red Bull(R) and beef jerky may take
the impulse space in stores across America.

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