US chocolate maker Hershey has said that it expects full-year sales to come in at the low end of its forecast, as rising prices and tough economic conditions drive down volumes.
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Posting its third-quarter results today (16 October), the Pennsylvania-based confectioner also predicted that sales growth would continue to slow in 2009 as price hikes are expected to hit volumes.
Hershey’s net income from operations, which is adjusted to exclude charges, was down 6% from US$145.81m, or $0.64 per share, in the third quarter of 2008, to $157.23m, or $0.68 per share, in 2007.
Sales were up 6.4% to $1.49bn.
“This growth was driven by price realisation, overall growth in core brands and new products, partially offset by softness in snacks and refreshment. Halloween is off to a good start with solid programming and merchandising in place,” president and CEO David West observed.
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By GlobalDataIn a bid to drive lacklustre sales, the maker of Reece’s Pieces has launched a number of new products, including premium Bliss and Starbucks lines.
Nevertheless, Hershey conceded today, that it expects earnings before one-time items to be toward the lower end of its $1.85 to $1.90 forecast range. Sales are expected to grow by 3-4%.
“In 2009, we expect net sales growth of 2-3% as the pricing action previously announced will be partially offset by lower volumes. We expect 2009 earnings per share-diluted from operations to increase, however, it will be at a rate below our long-term objective of 6-8% growth due to higher commodity prices, which remain at levels well above a year ago despite recent declines, as well as greater levels of consumer investment,” West concluded.
