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Hershey records first quarterly sales increase in a year

Dauphin County candy company declares dividends

The second quarter proved very sweet for The Hershey Co. and its investors.

According to the Dauphin County candy maker’s latest earnings report, released this morning, the company recorded a net profit of $146 million for the quarter ended July 3. Last year at this time, Hershey posted a loss of $99.9 million.

That news — helped by strong North American sales — comes as the company’s board this morning announced quarterly dividends of 61.8 cents on common stock and 56.2 cents on Class B common stock, an increase of 6 percent.

What wasn’t mentioned in the official release was anything related to Hershey’s recent rejection of a $23 billion acquisition offer from Illinois-based Mondelez International, maker of Oreo cookies and other big name snack foods.

“Second-quarter operating results were better than our estimates as North America and International sales sequentially improved, as expected, versus last quarter,” chairman, president and CEO John P. Bilbrey said in a statement.

“The company continues to generate steady free cash flow and has a strong balance sheet,” he added. “This dividend increase reflects our confidence in Hershey’s marketplace position and long-term growth potential.”

While this was Hershey’s first quarterly sales increase in a year, Mondelez this week recorded its 11th straight quarterly decline, CNBC reported

Even at Hershey, however, officials acknowledged lower-than-expected growth in its non-seasonal candy, mint and gum (CMG) category. For the 12 weeks ended July 9, Hershey’s U.S. CMG market share was 30.8 percent, a decline of 0.7 points versus the same period last year, officials said.

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Hershey highlights

Hershey’s North America net sales were $1.44 billion in the second quarter, up 3.2 percent over the same period last year. Excluding the impact of unfavorable exchanges rates in Canada, the increase was 3.5 percent.

Second-quarter net sales for the Hershey’s International and “other” segment increased 7.6 percent, to $192.8 million. Adjusted for currency exchange rates, net sales in Mexico and Brazil increased nearly 13 percent.

But not all was well internationally.

“As expected, China gross sales declined in line with expectations due to the challenging macroeconomic and competitive environment,” the company announced, adding: “China chocolate category retail sales sequentially improved in the second quarter versus the trends in the first quarter and second half of last year.”

Bilbrey also cited several upcoming highlights for the rest of the year:

• The upcoming launch of Reeses Pieces Peanut Butter Cups, Krave Meat Bars and a yet to be announced Snackfection item in the fourth quarter.

• Continued rollout of the Kit Kat Big Kat, Reese’s Snack Mix and Hershey’s Snack Bites products.

• In the fall, the company’s simple ingredients advertising campaign begins on Hershey’s Milk Chocolate Bars and Hershey’s Kisses Milk Chocolates, manufactured with fresh milk from local Pennsylvania farms, cocoa beans sourced responsibly from West Africa, pure cane sugar and natural flavors.

• There will be greater levels of in-store merchandising and displays with promotional events for the Summer Olympics and Reese’s NCAA Football College Game Day.

Roger DuPuis
Roger DuPuis covers Cumberland County, health care, transportation, distribution, energy and environment. Have a tip or question for him? Email him at rdupuis@cpbj.com.

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