Chocolate maker The Hershey Company has reported a rises in sales for the second quarter ended 3 July 2005, although earnings were down for the quarter because of a tax benefit recorded in the same period last year.
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Consolidated net sales for the second quarter were $988m compared with $894m for the second quarter of 2004. Net income for the second quarter was $97m compared with $147m for the same period in 2004.
Results for the pervious second quarter include the benefit of a $61.1m non-cash reduction of income tax expense resulting from adjustments to income tax contingency reserves following the completion of prior years’ tax audits. Excluding this item, net income for the second quarter of 2004 was $86m.
“Hershey’s strong second quarter results clearly show the continued momentum behind our value-enhancing strategy,” said Richard H. Lenny, chairman, president and CEO. “Organic sales growth of 7.6 percent represented a good balance between higher net price realization and continued new product innovation both within core confectionery and our snack platforms. The recently acquired Mauna Loa and Grupo Lorena businesses contributed three percent to the quarter’s 10.6 % sales growth.”
For the first six months of 2005, consolidated net sales were $2.115bn, compared with $1,907bn for the first half of 2004. Net income for the first six months of 2005 was $216m, compared with $254m for the first half of the previous year.
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By GlobalData“Hershey’s performance has been very healthy through the first half of 2005,” Lenny said. “We’ve delivered above-trend organic sales growth of 8.0 percent, strengthened our marketplace leadership, and delivered earnings per share-diluted growth from operations of 16.2% compared with the first half of last year. These results have been driven by broad-based innovation, superior retail execution and solid cost control.”
The company also announced a new programme to further advance its value-enhancing strategy. This program includes voluntary workforce reduction through an early retirement programme and an enhanced mutual separation programme, streamlining and creating new capabilities in Hershey’s North American operations; and closure of the company’s under-utilized Las Piedras, Puerto Rico manufacturing facility. Employees at this facility will receive severance support as well as assistance with career decisions and transition leading up to the plant closing in late 2005.
“The changes announced today are necessary for Hershey to remain competitive in the years ahead,” Lenny said. “They will enable us to streamline our business, increase the investment in our consumer and customer initiatives, and build new organization capabilities.”
