Hershey is to up the prices on its products by 11% as it continues to battle soaring commodity costs.
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The US confectionery giant said the price hike would help offset “significant increases” in its input costs, including commodities like cocoa, as well as fuel and packaging.
President and CEO Dave West said prices for ingredients like cocoa, sugar and peanuts had jumped by as much as 45% since the beginning of the year.
West said Hershey’s commodity costs would climb by over US$110m this year – a figure that could double in 2009.
“Commodity costs have been volatile over the last several years and continue to remain at levels that are well above historical averages,” West added.
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By GlobalDataHershey said it expects the price hike to hit volumes during the fourth quarter of the year but the company insisted it still expects to see net sales grow by 3-4%. The company also forecast net sales growth of 2-3% for 2009, down from its previous target of 3-5%.
The company, meanwhile, maintained its forecast for earnings per share-diluted from operations of $1.85-1.90 for 2008 but said earnings are likely to be at the lower end of that range.
Earnings per share-diluted from operations are expected to grow in 2009, Hershey added, but below its long-term target of 6-8% growth.
