Hershey raises 2012 earnings forecast02 February 2012US confectionery and bakery giant Hershey Co has raised its growth forecast for 2012 after being boosted by increased sales, cost savings and efficiency initiatives in 2011. Hershey, whose bakery brands include Baking Bars and Baking pieces, said that it expects 2012 earnings to hit $2.79 to $2.89 per share, including one-time charges of 16 cents to 19 cents per share that funded a cost reduction programme. Like many food manufacturers, Hershey’s margins had been hit by rising sugar and cocoa costs, which have subsequently eased in recent months. Hershey, which has raised prices by around 10% in the last year, said that it expects to deliver profit growth of 7-9%, up from 6-8%, thanks in-part to a 75 basis-point improvement in gross margin and above forecast sales growth. The company has raised its sales forecast growth from 3-5% to 5-7% and has plans to significantly raise its advertising spend over the coming year. In the last quarter, Hershey netted a profit of $142.1 million of 62 cents a share, up from $135.5 million or 59 cents a year earlier. Hershey reported sales of $1.57 billion and the company’s share price has jumped 30% over the past year. "We believe we have the right mix of seasonal specific advertising, coupons and programming lined up to help consumers adjust to the new price point," said John Bilbrey, Hershey’s chief executive to The Wall Street Journal. "Sales growth in mid-single digits and lessening commodity costs are a good formula for them in 2012," added Jack Russo, an analyst at Edward Jones. "With costs on the wane, we need to keep an eye on the big boys in terms of price competition.” | |
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