The Hershey Company (NYSE: HSY):
- Net Sales increase 2.4%, including a 0.8 point negative impact from foreign currency exchange rates
- Earnings per share-diluted of $1.11 as reported and $1.15 adjusted
- Outlook for 2014 net sales and adjusted earnings per share-diluted reaffirmed:
- Full-year net sales expected to increase 5-7%, driven primarily by volume
- Reported earnings per share-diluted expected to be $3.99 to $4.08
- Adjusted earnings per share-diluted expected to increase 9-11% and be in the $4.05 to $4.13 range
The Hershey Company (NYSE: HSY) today announced sales and earnings for the first quarter ended March 30, 2014. Consolidated net sales were $1,871,813,000 compared with $1,827,426,000 for the first quarter of 2013. Reported net income for the first quarter of 2014 was $252,495,000 or $1.11 per share-diluted, compared with $241,906,000 or $1.06 per share-diluted for the comparable period of 2013.
“The profile of Hershey’s results for the first quarter was slightly below our expectations,” said John P. Bilbrey, President and Chief Executive Officer, The Hershey Company. “Given U.S.
distribution gains in the year ago period, the timing of our more meaningful innovation later this year, and softness in Latin America, first quarter organic net sales growth was pressured. Additionally, U.S. retail trends varied and were impacted by lower consumer trips in the instant consumable channels and irregular purchasing patterns within the traditional food and mass channels. However, towards the end of the first quarter, consumer trends began to normalize and, while preliminary, April Nielsen data indicates a good sell through for the Easter season and a sequential improvement in non-seasonal candy.
“During the first quarter we also made solid progress against the initiatives we discussed earlier this year, giving us confidence Hershey will deliver on its 2014 expectations of 5 to 7 percent net sales growth, including the impact of foreign currency exchange rates, and a 9 to 11 percent increase in adjusted earnings per share-diluted. Net sales are expected to accelerate over the remainder of the year driven by core brands and innovation as well as the necessary amount of advertising and related consumer marketing. Specifically, our new product pipeline is robust. In the U.S.,
Spreads instant consumable items launch in late May and
Cool Blasts Chews and
Crunchy Clusters are expected to ship in the third quarter. In key international markets we will continue to build on
momentum and will begin a broader rollout of
Peanut Butter Cups in the second half of the year.”
As described in the Note below, for the first quarter of 2014, these results, prepared in accordance with U.S. generally accepted accounting principles (GAAP), included net pre-tax charges of $13.4 million or $0.04 per share-diluted. These charges included $3.0 million or $0.01 per share-diluted related to the Project Next Century program, net acquisition and transaction costs primarily associated with Shanghai Golden Monkey of $11.0 million or $0.03 per share-diluted, and non-service-related pension income (NSRPI) of $0.6 million. Reported gross margin of 46.6 percent increased 10 basis points versus last year while reported income before interest and income taxes (EBIT) increased 3.0 percent, generating EBIT margin of 21.6 percent, an increase of 20 basis points versus 2013. For the first quarter of 2013, results included pre-tax charges for Project Next Century of $7.0 million, or $0.02 per share-diluted, non-service-related pension expense (NSRPE) of $2.8 million or $0.01 per share-diluted, and acquisition and integration costs of $0.8 million. Adjusted net income, which excludes these net charges, was $259,975,000 or $1.15 per share-diluted in the first quarter of 2014, compared with $248,468,000 or $1.09 per share-diluted in the first quarter of 2013, an increase of 5.5 percent in adjusted earnings per share-diluted.