Hershey popped snacks
Hershey expects to generate 5% to 7% net sales growth in net sales in 2018.

HERSHEY, PA. — Shares of The Hershey Co. slid as much as 6% on Feb. 1 after the company posted lackluster results for the latest quarter. The chocolate maker has not been immune to pressures facing the packaged food industry, said Michele G. Buck, president and chief executive officer.

Michele Buck, Hershey
Michele Buck, president and c.e.o. of Hershey

Citing “choppy C.P.G. trends” and timing-related factors, Ms. Buck said Hershey’s momentum slowed near yearend.

Higher-than-expected acquisition-related costs weighed on full-year earnings, partially offsetting top-line growth and productivity and cost savings initiatives. Net income in the year ended Dec. 31, 2017, was $782,981,000, equal to $3.79 per share on the common stock, up 9% from $720,044,000, or $3.45 per share, in the previous fiscal year. Net sales rose 1% to $7,515,426,000 from $7,440,181,000.

Hershey Michele Buck pull quote

Fourth-quarter net income was $181,133,000, or 88c per share, up 55% from $116,853,000, or 56c per share, in the year-ago period. Net sales for the quarter totaled $1,939,636,000, down 1.6% from $1,970,244,000.

“Importantly, we understand where opportunities exist and have plans to improve upon our performance,” Ms. Buck said during a Feb. 1 earnings call.

In the year ahead, Hershey remains focused on driving growth in its confectionery business while expanding into the fast-growing salty snacks segment. The company finalized its $1.6 billion acquisition of Amplify Snack Brands, Inc., parent company of SkinnyPop, Paqui, Tyrrells and Oatmega brands. The deal was announced in December and is Hershey’s largest to date.

Amplify Snack Brands
Hershey has finalized its $1.6 billion acquisition of Amplify Snack Brands.

“Our strong U.S. marketplace presence and solid financial position give us the flexibility to smartly invest in confectionery and other warehouse salty snacks, as well as in the capabilities that will give us a competitive edge at retail and with consumers,” Ms. Buck said. “We believe the foundation we have set in 2017 and the investments we’re continuing to make this year are in the areas of the business that set us up for continued growth.”

The company expects to generate 5% to 7% net sales growth in net sales in 2018, with organic net sales growth flat to up 2%, and the acquisition of Amplify Snack Brands adding 5 percentage points. A shorter Easter season and continued optimization of stock-keeping units are expected to pressure the company’s confectionery business. Executives expect an increase of 12% to 14% in adjusted earnings per share-diluted over the prior year.