• Q2 loss of US$99.9m
  • Impairment charge on Shanghai Golden Monkey
  • Cuts forecast for annual sales again

Hershey today (7 August) reported a second-quarter loss of just under US$100m on the back of an impairment charge on its Chinese unit Shanghai Golden Monkey – and again lowered its forecast for annual sales.

For the period ended 5 July, Hershey booked a loss of $99.9m compared with an income of $168.2m a year ago. Operating profit for the period fell 97.3% to $7.5m.

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In June, Hershey hinted it could make an impairment charge on Shanghai Golden Monkey, in which it acquired an 80% stake last year.

Net sales were flat at $1.57bn thanks to price increases, with a 5.8 point benefit from hikes offset by lower volumes, increased promotional spending in China and foreign currency.

Hershey president, chairman and CEO J.P. Bilbrey said the results were "largely in line with…revised expectations".

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"Results were adversely impacted by international performance, primarily in China. As previously stated, macro-economic challenges and changing consumer shopping behaviour in China were a headwind. Over the remainder of the year we are optimistic that our core brand and new product initiatives in both North America and international markets will drive growth," he said.

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In June, Hershey lowered its forecast for net sales from growth of 4.5-5.5% to an increase of 2.5-3.5%, the third time it had cut its guidance in three months. It cited weakness in China and said its performance in the country had been "below expectations". During the same announcement it said it was axing 300 jobs as part of a "productivity initiative".

Today, Hershey again reduced its sales forecast, predicting its net sales would rise by 1.5-2.5%. The company said there would be a net benefit from acquisitions and divestitures of about one percentage point and a negative impact from foreign currency exchange of approximately 1.5 percentage points.