Hershey today (24 January) booked a slump in fourth-quarter profits as rising dairy costs and restructuring charges hit the US confectionery giant.
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The company saw net income tumble 65% to US$54.3m during the three months to 31 December. Net sales were inched up – but only marginally – reaching US$1.34bn compared to US$1.33bn a year earlier.
Hershey said the results were in line with the company’s expectations. The company pointed to US$95.9m in charges it had racked up due to changes to its global supply chain and a revamp of its business in Brazil.
Dairy costs continued to weigh on Hershey during the latter part of the year and the company warned that it expects its commodity bill to lengthen at a similar rate in 2008.
Hershey’s fourth-quarter results compounded a torrid year for the company. Full-year income plunged 62% to $214.1m, while sales were flat at $4.9bn.
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By GlobalDataPresident and CEO Dave West said Hershey’s “primary goal” this year was to “stabilise” its business in the US, the company’s largest market.
“Markedly higher brand-building support, including advertising, quality merchandising, enhanced retail coverage and new chocolate products within the premium and trade-up segments will enable us to achieve this goal,” West said.
Hershey’s chief executive added that cost-savings from its supply chain revamp would help offset continued rises in commodity costs.
The company has forecast sales growth of 3-4% for 2008. Hershey predicts earnings per share – diluted from operations – of $1.85-1.90.
