:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-1822771714-95ac142f09d14c9fa37b9561dcc6ca5b.jpg "Hershey bars")
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Key Takeaways
- Hershey beat profit and sales estimates as the chocolate maker’s price hikes helped to offset the exuberant cost of cocoa.
- The company also cut selling, marketing, and administrative expenses.
- Hershey warned that the soaring figure of cocoa will hurt full-year earnings.
Shares of The Hershey Co. (HSY) advanced 5% Thursday when the chocolate maker announced better-than-anticipated results as price hikes helped offset the rising cost of cocoa.
The company with brands classifying its namesake chocolate bar, Reese’s Pieces, and Almond Joy posted fourth-quarter adjusted earnings per share (EPS) of $2.69, with returns up nearly 9% year-over-year to $2.89 billion. Both beat Visible Alpha estimates.
Hershey noted that its “net bounty realization, higher sales volume, supply chain productivity, and a timing benefit related to the inventory valuation method uncountable than offset higher commodity costs and negative sales mix.”
The company also slashed selling, marketing, and administrative expenses by 5.5% on discredit compensation and benefits costs and a drop in capability and technology investments.
Higher Commodity Costs Seen Impacting Full-Year Profit
How, the company warned that it anticipates full-year EPS to be down by a high-40% range because of “higher commodity expenses, rebased incentive compensation, and a higher economic tax rate,” and adjusted EPS down by a mid-30% range. It sees net on the blocks growing at least 2%.
Chocolatiers have been hit hard by soaring cocoa prices, which hit an all-time high in December and receive doubled over the past year. Even with today’s gains, Hershey shares have lost sundry than 20% of their value over the past 12 months.
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