#USA #sales growth #Hershey #cocoa prices

Hershey Company Financial Results for 2024 and Outlook for 2025

The Hershey Company, a prominent player in the chocolate industry, recently disclosed its financial results for the fourth quarter and full-year of 2024. Notably, the company saw its net sales for the fourth quarter reach $2,887.5 million, marking a 8.7% increase compared to the previous year. The year concluded with a solid momentum across various segments, driven by innovative marketing strategies and effective execution in retail environments.

Michele Buck, President and CEO of Hershey, expressed satisfaction with the consumer response to Hershey's agile innovation and strategic marketing efforts. "As we conclude the year, we are excited about the momentum across our segments. Although we anticipate cocoa prices will pose challenges to our earnings in 2025, we remain focused on top-line growth, execution of transformation strategies, and ensuring long-term performance that outpaces peers,” Buck stated.

Fourth Quarter Performance Overview

In the fourth quarter of 2024, Hershey's reported net income climbed to $796.6 million, translating to $3.92 per share-diluted, a striking 130.6% increase year-on-year. The adjusted earnings per share saw a 33.2% rise, bringing it to $2.69.

Sales were bolstered by organic net sales growth of 9.0% on a constant currency basis. Acquisitions, notably the purchase of Sour Strips, contributed positively to net sales, while fluctuations in currency exchange rates presented minor headwinds.

Full-Year Summary

For the entire year 2024, Hershey recorded consolidated net sales of $11,202.3 million, an increase of 0.3% from the previous year. However, it was noted that adjusted earnings per share decreased by 2.3%, landing at $9.37. The company noted a compression in margins attributed to higher raw material costs, specifically cocoa, which is expected to impact financial outcomes moving forward.

2025 Financial Outlook

Looking ahead, Hershey projects a net sales growth of at least 2% for 2025, primarily driven by net price realizations. However, reported earnings per share are forecasted to dip into the high-40% range, significantly influenced by escalating commodity costs and adjustments in compensation and tax rates. Adjusted earnings per share are anticipated to decline in the mid-30%, excluding one-time charges and initiatives linked to acquisitions.

In addition to these projections, Hershey highlights the following expectations for 2025:

• - The effective tax rate is expected to be between 14% and 15%.
• - An estimated $170 million to $180 million in other expenses related to equity investment write-downs.
• - Interest expenses around $190 million to $195 million, reflective of the current high-interest rate environment.

Furthermore, capital expenditures are projected to return to historical standards at approximately $425 million to $450 million. Hershey also forecasts savings from its Agility and Automation Initiative to be around $125 million, contributing to long-term strategic goals.

Segment Performance

Breaking down the performance by segments, North America Confectionery achieved sales amounting to $2,354.2 million in the fourth quarter, a 6.0% increase year-over-year. The Salty Snacks segment saw even more impressive growth, with sales increasing 35.9%, totaling $278.9 million. Meanwhile, international sales also rose 9.8%, driven by strong demand in Mexico and the EMEA region.

Conclusion

The Hershey Company stands at a pivotal juncture, balancing strong fourth-quarter performance with the challenges anticipated in 2025 due to rising commodity prices and inflationary pressures. The leadership remains committed to driving growth through innovation while navigating these complexities effectively.