Profit Waxes at Hershey

The chocolate maker sees earnings rise and hit estimates.
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Hershey

(HSY) - Get Report

matched fourth-quarter expectations and said it expects 2006 gains to outstrip its long-term forecast.

The Hershey, Pa., chocolate maker made $173 million, or 70 cents a diluted share, up from the year-ago $167 million, or 67 cents a share. Revenue rose to $1.35 billion from the year-ago $1.27 billion.

The latest quarter included a 4-cent charge for the company's restructuring plan and 2 cents worth of stock-based compensation expense. Excluding those items, latest-quarter earnings matched the Thomson First Call analyst consensus estimate at 76 cents a share.

"Fourth-quarter results were solid with balanced performance in sales, operating margin, and profitability," said CEO Richard H. Lenny. "Sales growth for the quarter of 6.7% was driven by organic sales growth of nearly four percent from new products and strong seasonal shipments. Business acquisitions accounted for the additional growth. Hershey's marketplace performance strengthened during the quarter as our takeaway within the U.S. confectionery category increased by 7%, resulting in a 1.4 point gain in market share.

"As we enter 2006, Hershey's value-enhancing strategy remains relevant and sustainable," Lenny said. "Product news across the portfolio including limited editions, new platforms, and benefit upgrades to existing brands will be the key driver of our sales growth. At retail, we intend to further leverage Hershey's leadership position in all major classes of trade and in the very important single-serve packaging format.

"While input costs will be broadly higher in 2006, the combination of net price realization and productivity initiatives across the business system is expected to yield an improvement in operating margins. Therefore, for 2006, we expect net sales to increase at a rate somewhat above our 3%-4% long-term goal, and expect diluted earnings per share from operations, which excludes business realignment charges, to increase at a rate slightly above our 9%-11% long-term goal."