Hershey, the US confectionery giant, today (23 July) posted lower underlying quarterly profits as the company upped marketing expenditure in bid to boost sales.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The company booked net income from operations of US$66.9m, down from $81.8m a year ago.
In June, Hershey said it would increase its spending on advertising by 20% in each of the next two years as it looks to compete with its two biggest rivals Mars and Wrigley, who agreed to merge earlier this year.
On a reported basis, net income surged during the second quarter against a year ago, when the company’s results were hit by restructuring costs.
Net income for the second quarter of 2008 stood at $41.5m. In 2007, second-quarter net income reached $3.6m as Hershey revamped its global supply chain and cut its manufacturing base.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataExcluding one-time charges, second-quarter earnings fell to 29 cents a share from 35 cents a year earlier.
Revenue, meanwhile, increased by 5.1% to $1.11bn, while organic sales increased 3.5% on higher pricing.
Commenting on the results, Hershey president and CEO David West said: “We’re pleased with our US marketplace performance in the second quarter as we improved in all classes of trade. The category has and will continue to grow.
“We expect Hershey’s year-over-year core brand marketplace performance improvement to continue, benefiting from the new approach of our consumer-driven demand model.”
For the first half of 2008, Hershey booked net income from operations of $150.9m against $200.5m a year earlier. Revenue rose 2.7% to reach $2.26bn.
Looking to the full year, Hershey said that it anticipated revenue growth of 3-4% to drive EPS of $1.85-1.90.
