Corporate Profiles - 2024 - 76

COMPANY overview
The Hershey Co.
Confectioner grapples with cocoa prices,
consumer spending pullback
M
ichele G. Buck, president and chief executive
officer of The Hershey Co., faces many
of the same operational challenges as
other leaders of consumer packaged goods companies,
although she is likely more focused than some
on cocoa prices.
The Hershey, Pa.-based company has been adversely
affected by higher costs for the commodity,
and Buck has projected continuing headwinds into
2025 due to supply challenges and price volatility.
On an Aug. 1 earnings call, Buck said while the
company believes the current cocoa price is not sustainable,
future prices will " be higher levels than we've
seen before this kind of recent historic pricing cycle. "
She added Hershey's product pricing approach
has been measured but may need to change.
" We've absorbed a lot of inflation already, but we
Snacks business saw second-quarter volume
growth push up net sales by 6.4% to $289.9 million
compared with the same period last year, while
segment income jumped 19% to $52.2 million.
The company credited the income boost to higher
sales and lower commodity costs, which it said
more than offset higher marketing levels.
Hershey adjusted downward its full-year 2024
guidance and now is expecting net sales growth of
approximately 2% rather than the previous guidance
of 2% to 3%. The company also is projecting
reported earnings-per-share growth for the full
year to be down 3% to down 1%, which compared
to a previous projection of flat.
" Our business has been impacted by these
trends, but we are pleased to see continued growth
in the confection category and momentum building
in our salty snacks portfolio, " Buck said. " Our
second-half innovation is expected to bring energy
to our categories, and we are confident our evolving
strategies will meet consumers' changing needs
and drive long-term success. "
Hershey is prioritizing investment in Reese's
candy, or what Buck called the company's " mothership
brand, " due to its popularity and strong
growth.
Innovation is playing a part in this targeted
Chief executive officer -
Michele G. Buck
do believe we need to pass some of it on, " Buck said.
Increased commodity costs - plus reduced
sales reflecting more budget-conscious consumers
- resulted in a 29% second-quarter income
drop to $464.5 million from the prior-year period
in Hershey's North America Confectionery business.
" Today's operating environment remains dynamic
with consumers pulling back on discretionary
spending, " Buck said.
Net sales for the segment came in at $1.58 billion
for the second quarter, which was a 21% decrease
compared with the second quarter of 2023.
In contrast,
Hershey's North America Salty
76 \ October 2024
brand strategy, with Hershey debuting Reese's Caramel
Big Cup last fall. Additionally, the company
introduced a cheddar jalapeño flavor of its SkinnyPop
popcorn, plus a new flavor of Dot's Pretzels
seasoned with Parmesan and garlic.
Moving forward, Buck said attracting customer
interest at retail will be " absolutely critical " to success
in the company's North America Confectionery
business.
" Our category management team spends a lot
of time partnering with retailers to look for opportunities
to improve the availability of our category,
the visibility of the category as consumer behaviors
and store environment shifts, " she said.
Hershey also continues to work on its sustainability
goals and has made progress on commitments
to support cocoa supply chains and limit
emissions, according to its 2023 environmental,
social and governance report published in June. CP
Source: The Hershey Co.
Hershey Co. net sales
in millions
2023
$11,165
Hershey Co. net income
in millions
2023
$1,862
2022
$1,645
2021
$1,478
2022
$10,419
2021
$8,971
Source: The Hershey Co.
Hershey Co. share price
$170
$180
$190
$200
$210
Sept. 4, 2024 = $198.87
HIGH =
Sept. 18, 2023 =
$206.81
LOW = Dec. 20, 2023 =
$175.82
Sept. Nov.
2023
Jan.
2024
March M Julyay
Source: New York Stock Exchange
HERSHEY CO.
Sept.
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Corporate Profiles - 2024

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