Proving recession proof, The Hershey Company enjoys sweet earnings

The year 2022 was an historically sweet one for The Hershey Company. 

Hershey recently announced net sales and earnings for the fourth quarter and full year that ended Dec. 31, 2022, and the results are that despite record inflation, supply chain disruptions, and economic uncertainty for consumers, the company enjoyed one of the strongest years in its long history. 

“It took tremendous hard work, perseverance, and agility from every one of our employees and partners,” Chairman and CEO Michele Buck said in a statement, “and I couldn’t be prouder of what we have accomplished or more excited for what lies ahead.” 

Hershey’s Fourth Quarter Financial Summary revealed the following: 

• Consolidated net sales of $2,652.3 million, an increase of 14.0%. 
• Organic, constant currency net sales increased 10.7%. 
• The impact of acquisitions on net sales was a 3.6-point benefit. 

• Reported net income of $396.3 million, or $1.92 per share-diluted, an increase of 18.5%. 
• Adjusted earnings per share-diluted of $2.02, an increase of 19.5%. 

The company’s Full Year Financial Results Summary for 2022 listed the following: 

• Consolidated net sales of $10,419.3 million, an increase of 16.1%. 

• Organic, constant currency net sales increased 12.0%. 
• The net impact of acquisitions on net sales was a 4.3-point benefit. 
• Reported net income of $1,644.8 million, or $7.96 per share-diluted, an increase of 12.0%. 
• Adjusted earnings per share-diluted of $8.52, an increase of 18.5%. 

Looking forward, The Hershey Company listed the following expectations: 

• A reported and adjusted effective tax rate in the range of 15% to 16%. 
• Other expense, which primarily reflects the write-down of equity investments that qualify for a tax credit, of approximately $190 million to $210 million. 
• Interest expense of approximately $145 million to $155 million, reflecting a higher interest rate environment. 
• Capital expenditures of approximately $800 million to $900 million, driven by core confection capacity expansion and continued investments in a digital infrastructure including the build and upgrade of a new ERP system across the enterprise. 

“We expect to deliver another year of strong sales and earnings growth in 2023,” said Buck, “as we invest in our amazing portfolio of brands, additional capacity and capabilities.” 

The positive financial news was welcomed by The Hershey Company, which along with The Trader Joe’s Company was hit in January 2023 with class-action lawsuits concerning the amount of lead and cadmium in select dark chocolate products. 

The suits allege that Hershey and Trader Joe’s did not disclose on their packaging that the select dark chocolate products misled consumers contain the heavy metals and thus misled consumers. 

In December 2022, Consumer Reports issued a finding that select dark chocolate made by Hershey, Trader Joe’s and other brands contained levels of lead and cadmium that are potentially harmful and hazardous.