Hershey’s Reports Third Quarter Results

“I’m particularly pleased with our chocolate marketplace performance where we gained 0.4 market share points driven by core brands and new products,” says Hershey’s CEO.

The Hershey Co. has announced sales and earnings for the third quarter ended Sept. 30, 2012.

Consolidated net sales were $1,746,709,000 compared with $1,624,249,000 for the third quarter of 2011. Reported net income for the third quarter of 2012 was $176,716,000 or 77 cents per share-diluted, compared with $196,695,000 or 86 cents per share-diluted for the comparable period of 2011.

Highlights Include:
• Net sales increase 7.5%
• Earnings per share-diluted of 77 cents as reported and 87 cents adjusted
• Full year net sales growth range narrowed; expected to increase 8-9%, including Brookside Foods Ltd. acquisition
• Outlook for 2012 reported and adjusted earnings per share-diluted updated:
– Reported earnings per share-diluted expected to be $2.87 to $2.92
– Adjusted earnings per share-diluted expected to increase 14-15% and be in the $3.22 to $3.25 range, greater than the previous estimate of a 12-14% increase
• Quarterly dividend declared and increased 10.5% on Common Stock

“The Hershey Co. delivered another good quarter of core brand growth driven by solid performance within key retail channels,” said John Bilbrey, president and CEO, The Hershey Co. “Importantly, Hershey U.S. candy, mint and gum (CMG) 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.”

He added, “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 CMG. 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 CMG 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.”

Looking Ahead
“As we look to 2013, we assume the economic environment for retailers and consumers will continue to be challenging. However, we believe the investments we’ve made have resulted in a business model that is more efficient and effective, enabling us to deliver predictable, consistent and achievable marketplace and financial performance,” said Bilbrey.

He expects 2013 net sales growth to be within the company’s 5-7% long-term target, including the impact of foreign currency exchange rates, as Hershey’s continues to focus on core brands and innovation in both the U.S. and key international markets.

“Additionally, we’ll leverage Hershey’s scale at retail as we launch Brookside branded products in the broader U.S. food, drug and mass channels. As we stated earlier this year, we remain focused on gross margin. We have solid productivity and cost savings initiatives in place and, while early in the planning cycle, we don’t expect input cost inflation next year. Therefore, we expect to achieve gross margin expansion in 2013 and growth in adjusted earnings per share-diluted in the 8-10% range, consistent with our long-term target,” Bilbrey concluded.



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