The Hershey Company (NYSE:HSY) is the nation’s 2nd largest manufacturer of quality chocolate and sugar confectionery products. The company markets such iconic brands as Hershey’s, Reese’s, Kit Kat, and Hershey’s Kisses. Privately-owned Mars Inc. leapfrogged Hershey last year to become the nation’s largest candy maker with its purchase of the William Wrigley Jr. Company.
Hershey announced today that its first quarter profit surged 20 percent, beating Wall Street expectations. The company’s results were helped by several factors: a price increase which took effect in August, a gain in US market share, and a reporting period that captured more days of Easter sales. This year’s first quarter ended nearly a week later than last year’s, shifting more Easter sales into this year’s first quarter.
Hershey said that it earned $75.9 million or 33 cents a share, in the three months ended April 5. A year earlier, the company earned $63.2 million or 28 cents a share. The company also said that revenues rose 6.5 per cent to nearly $1.24 billion from $1.16 billion a year ago. Wall Street estimates had been for revenues of $1.19 billion.
Hershey’s results were also helped by the company’s continuing efforts to restructure its worldwide supply chain. The company’s president and CEO, David J. West, said that â€œHershey’s first quarter results represent a good start to 2009. Performance was sold with gains in net sales, profitability and US market shareâ€.
Hershey said that its US market share rose 0.5 percent in retail channels where such data is monitored. Hershey has been spending more on advertising in recent months in an effort to regain market share against rivals such as Mars Inc.
The company also maintained its expectations of 2-3 percent sales growth in 2009. However, profit growth is expected to fall below its long-term objective of 6-8 percent annual growth. In light of the current economic difficulties, these numbers are reasonable.