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The Hershey Management Discusses Q2 2012 Results - Earnings Call Transcript

Total Hershey's CMG, that's candy, mint and gum, retail takeaway for the year-to-date period through June 16, 2012, in channels that account for about 90% of our U.S. retail business, was up 6.1%, resulting in a 0.3 point market share again.

As a reminder, this is xAOC+C-store data consisting of the food, drug, mass, x [ph] and C-store channels plus the inclusion of Walmart and partial Dollar, Club and Military channels.

Our result for the second quarter were solid as net sales increased 6.7% and adjusted EPS-diluted grew 17.9%. Bert will provide you with all of the financial details. But as it relates to net sales, growth was primarily driven by net price realization.

New product contributed about 2 points to our quarterly sales growth while everyday, core volume was off about 3 points. In terms of marketplace performance, the reported IRI and Nielsen second quarter, the 12-week period ended June 16, does not encompass the entire Easter season in both the year-ago and current periods. Therefore, my remarks today will refer to year-to-date marketplace performance for the 24 weeks ended June 16, 2012.

As it relates to Easter, we had good sell-through and gained Easter market share of 0.9 points in the xAOC universe. We won Easter for the fourth consecutive year, and our market share in this key season expanded to about 36%. Although, note that the shorter Easter season in 2012 versus 2011 is a headwind for our overall chocolate market share performance this year.

Now for some further details on our overall year-to-date marketplace performance. Hershey marketplace performance by segment is progressing as planned. Recall, the year-ago period benefited from our major product launches, primarily Reese's Minis and Hershey's Drops that occurred early in the year. Our more significant 2012 innovation builds in Q2 and beyond, and we expect this will have a favorable impact on our marketplace performance in the second half of the year.

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