News

Hershey CEO "excited" by 4Q snackfection

1 Aug 2016

Announcing the company's 2Q financial results, Hershey CEO John Bilbrey said he was particularly excited about the upcoming launch of a yet to be announced Snackfection item in the fourth quarter.

The Hershey Company has announced sales and earnings for the second quarter ended July 3, 2016. Consolidated net sales were $1,637.7 million compared with$1,578.8 million for the second quarter of 2015. Reported net income for the second quarter of 2016 was $146.0 million or $0.68 per share-diluted, compared with a net loss of$99.9 million or $0.47 per share-diluted for the comparable period of 2015.

"Second-quarter operating results were better than our estimates as North America and International sales sequentially improved, as expected, versus last quarter," said John P. Bilbrey, Chairman, President and Chief Executive Officer, The Hershey Company. "Performance partially benefited from the timing of select merchandising and program net sales that occurred in the second quarter that were initially expected to ship in the third quarter. Non-seasonal candy, mint and gum (CMG) category growth progressed in the second quarter; however, given the amount of activity in the marketplace, category growth was less than what we anticipated. We've yet to experience consistent broad-based marketplace gains that are reflective of the attractive CMG category and Hershey's competitive advantages.”

“In the coming quarters we will begin to share the results of the work being performed that should benefit the company in the near and long term. Over the remainder of 2016, our CMG in-store merchandising, new products and consumer investment will be strong and should result in a sequential improvement in retail takeaway performance. Additionally, as we stated last quarter, the company continues to focus on its cost structure and estimates that full-year 2016 productivity and cost savings initiatives will be greater than our previous forecast, enabling the company to deliver on its adjusted earnings per share-diluted commitment. I'm also pleased that the Board of Directors approved a dividend increase of 6%. The company continues to generate steady free cash flow and has a strong balance sheet. This dividend increase reflects our confidence in Hershey's marketplace position and long-term growth potential."

For the first six months of 2016, consolidated net sales were $3,466.5 million compared with $3,516.6 million for the same period of 2015, a decrease of 1.4%. Reported net income for the first six month of 2016 was $375.8 million or$1.74 per share-diluted, compared with a $144.8 million or $0.65 per share-diluted for the comparable period of 2015.For the first six months of 2016 and 2015, these results, prepared in accordance with GAAP, included items impacting comparability of $60.7 million and $281.6 million, or $0.21 and $1.22 per share-diluted, respectively. Adjusted net income, which excludes these items, was $421.5 million, or $1.95 per share-diluted, for the first six months of 2016, compared with $415.4 million, or $1.87 per share-diluted, for the same period of 2015, an increase of 4.3% in adjusted earnings per share-diluted.

"Over the remainder of the year we believe our mix of new products and in-store programming will bring the right level of excitement, variety and news to the category," Bilbrey continued. "We're particularly excited about the upcoming launch of Reeses Pieces Peanut Butter Cups, Krave Meat Bars and a yet to be announced Snackfection item in the fourth quarter. We'll also continue to rollout the Kit Kat Big Kat, Reese's Snack Mix and Hershey's Snack Bites products.”

“Additionally, in the fall, our simple ingredients advertising campaign begins on Hershey's Milk Chocolate Bars and Hershey's Kisses Milk Chocolates manufactured with fresh milk from local Pennsylvania farms, cocoa beans sourced responsibly from West Africa, pure cane sugar and natural flavors. We'll also have greater levels of in-store merchandising and displays as we leverage large promotional events such as the Summer Olympics and Reese's NCAA Football College Game Day. In the second half of the year in China, distribution gains in smaller format stores will continue and a new advertising campaign on Hershey's Milk Chocolate Bars and Hershey's Kisses Milk Chocolates will begin.”