Supply chain costs suppress Hershey income

by Staff
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HERHSEY, PA. — Income for the Hershey Co. was down 10% during the third quarter as the result of various charges related to the Project Next Century Program and acquisition and integration costs.

For the quarter ended Sept. 30, the company had an income of $176,716,000, equal to 80c per share on the common stock, which compared with an income of $196,695,000, equal to 89c per share, during the same quarter of the previous year. Sales for the quarter were $1,746,709,000, up 8% from $1,624,249,000 during the same quarter of the previous year.

Charges incurred by the company during the quarter included $25.8 million for its Project Next Century supply chain improvement program, and $4.8 million for acquisition and integration costs related to Hershey’s purchase of Brookside Foods Ltd.

“The Hershey Co. delivered another good quarter of core brand growth driven by solid performance within key retail channels,” said John P. Bilbrey, president and chief executive officer. “Importantly, Hershey U.S. candy, mint and gum retail takeaway for the 12 weeks ended Oct. 6, 2012, in the expanded all outlet combined plus convenience store channels (xAOC+C-store), which accounts for approximately 90% of our U.S. retail business, was up 5.9%, resulting in a market share gain of 1.1 points.

“Our performance was solid in the convenience and dollar store channels with volume and unit trends positive. Overall, Hershey’s results were balanced as we gained xAOC+C-store market share within all segments of C.M.G. I’m particularly pleased with our chocolate marketplace performance where we gained 0.4 market share points driven by core brands and new products. Our C.M.G. volume and unit trends at retail continue to progress and we expect sequential improvement in the fourth quarter. Additionally, Halloween sales are off to a good start with solid programming, merchandising and promotions being executed in the marketplace.”

For the nine months ended Sept. 30, the company saw income rise 5% to $511,052,000, equal to $2.33 per share, compared with $486,829,000, equal to $2.20 per share, during the same period of the previous year. Sales for the nine months were $4,893,217,000, up 8% from $4,513,643,000 during the same period of the previous year.

The company now says its outlook for 2012 reported diluted earnings per share will be between $2.87 and $2.92.

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