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Hershey shares melt on 3Q miss

Written by The Associated Press | Oct 25, 2018 7:52 AM
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Photo by Jeremy Long, Lebanon Daily News

The Hershey Company officially opened up its 19 East office building in downtown Hershey on Thursday. The site was Milton Hershey's original chocolate factory.

This story has been updated. 

(Hershey) -- Hershey Co. shares melted Thursday after the company missed Wall Street's profit forecast and struggled with rising costs.

But analysts said a 2.5-percent price increase announced in June should help the Dauphin County-based company deal with higher wages and transportation costs.

Hershey reported a third-quarter profit of $263.7 million, down 3.5 percent from the July-September period a year ago. Revenue was up 2.3 percent to $2.08 billion for the quarter, meeting analysts' expectations.

But higher costs and lower prices caused Hershey's earnings to come in lower than expected. The company earned $1.55 per share adjusted for non-recurring costs, including charges related to its recent acquisition of Skinny Pop maker Amplify. Analysts surveyed by Zacks Investment Research expected earnings of $1.56 per share.

Hershey shares fell 5 percent to $102.34 in morning trading.

Hershey is raising prices by an average of 2.5 percent across the board for its products, which include Reese's Cups and Twizzlers.

On Thursday, Chief Financial Officer Patricia Little said the impact will be felt throughout next year. Some price increases will take affect in January; others will come as new terms are reached with retailers. Hershey also expects to get a bump from improved packaging and graphics and reductions in the amount of food per package.

Bernstein analyst Alexia Howard said in a note to investors that the price increase "is clearly one of the factors that should enable the company to hit better gross margin trends going into 2019, in combination with the company's continuous improvement program."

Hershey said it expects full-year net sales to increase toward the low end of its previously announced range of 3.5 percent to 5.5 percent. But it reaffirmed that its adjusted earnings will be in the range of $5.33 to $5.43 per share.

An earlier story appears below. 

(Hershey) -- The Hershey Company has reported third-quarter profit of $263.7 million.

The Hershey-based company said it had profit of $1.25 per share. Earnings, adjusted for non-recurring costs and costs related to mergers and acquisitions, were $1.55 per share.

The results did not meet Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.56 per share.

The chocolate bar and candy maker posted revenue of $2.08 billion in the period, which met Street forecasts.

Hershey expects full-year earnings in the range of $5.33 to $5.43 per share.

Hershey shares have decreased almost 5 percent since the beginning of the year, while the Standard & Poor's 500 index has dropped roughly 1 percent. The stock has declined 1 percent in the last 12 months.

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