Market share gains boost Hershey's earnings
Feb. 2, 2011
by Keith Nunes
HERSHEY, PA. – The Hershey Co. ended fiscal 2010 on a positive note, reporting net income of $509,799,000, equal to $2.29 per share on the common stock, for the full year ended Dec. 31. The results are an increase compared to the previous year when the company recorded net income of $435,994,000, equal to $1.97 per share.
Sales for 2010 were $5,671,009,000, and increase compared to sales of $5,298,668,000 for fiscal 2009.
“Hershey ended 2010 strongly, with high-quality net sales and earnings growth for the full year, and strong marketplace performance in the fourth quarter,” said David J. West, president and chief executive officer. “During 2010, macroeconomic uncertainty persisted, however, confectionery category growth was relatively consistent throughout the year. Our financial performance allowed us to be flexible in our approach to category and brand-building investment throughout 2010 and especially in the fourth quarter. This disciplined approach resulted in solid financial performance and increased market share.”
During the fourth quarter, the Hershey Co.’s net income was $135,513,000, equal to 61c per share on the common stock. The results were a slight increase compared to the previous year when the company’s net income was $126,779,000, equal to 57c per share.
Sales for the quarter were $1,482,809,000 during fiscal 2010 compared to $1,407,336,000 during the previous year.
“We are very pleased with our fourth quarter marketplace performance,” said Mr. West. “Our business has responded to the investments we have made, which has enabled us to continue our marketplace momentum. In the quarter, Hershey’s net sales increased 5.4%, driven primarily by volume, including continued faster-paced growth in emerging markets. Net price realization, primarily in the U.S., Canada and Mexico, and foreign currency exchange rates were an approximate 1.6 point and 0.6 point benefit, respectively.
“Strong results at key retail customers continued and overall marketplace performance was in line with our expectations. Specifically, Hershey’s U.S. retail takeaway for the 12 weeks and 52 weeks ended January 1, 2011, in channels that account for over 80% of our U.S. retail business, was up 6.2% and 5.3%, respectively. In the channels measured by syndicated data, U.S. market share for the 12 weeks and 52 weeks ended January 1, 2011, increased 0.5 points and 0.3 points, respectively.”
For fiscal 2011, the company is forecasting earnings per share diluted to be in the range of $2.54 to $2.63.
“While we anticipate meaningfully higher input costs in 2011, productivity and cost savings initiatives are in place and we estimate that full-year 2011 adjusted gross margin will be about the same as last year, while we continue to leverage the global go-to-market capabilities we have built over the past few years,” said Mr. West. “As a result, we expect full-year 2011 net sales and adjusted earnings per share-diluted growth to be around the top of the company’s long-term 3% to 5% and 6% to 8% objectives, respectively.”