Key Takeaways
- Hershey beat profit and sales estimates as the chocolate maker’s price hikes helped to offset the higher cost of cocoa.
- The company also cut selling, marketing, and administrative expenses.
- Hershey warned that the soaring price of cocoa will hurt full-year earnings.
Shares of The Hershey Co. (HSY) advanced 5% Thursday when the chocolate maker reported better-than-anticipated results as price hikes helped offset the rising cost of cocoa.
The company with brands including its namesake chocolate bar, Reese’s Pieces, and Almond Joy posted fourth-quarter adjusted earnings per share (EPS) of $2.69, with revenue up nearly 9% year-over-year to $2.89 billion. Both beat Visible Alpha estimates.
Hershey noted that its “net price realization, higher sales volume, supply chain productivity, and a timing benefit related to the inventory valuation method more than offset higher commodity costs and negative sales mix.”
The company also slashed selling, marketing, and administrative expenses by 5.5% on lower compensation and benefits costs and a drop in capability and technology investments.
Higher Commodity Costs Seen Impacting Full-Year Profit
However, the company warned that it anticipates full-year EPS to be down by a high-40% range because of “higher commodity costs, rebased incentive compensation, and a higher economic tax rate,” and adjusted EPS down by a mid-30% range. It sees net sales growing at least 2%.
Chocolatiers have been hit hard by soaring cocoa prices, which hit an all-time high in December and have doubled over the past year. Even with today’s gains, Hershey shares have lost more than 20% of their value over the past 12 months.
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