Hershey’s Q2 net income has risen 31% to $53.4 million. Hershey’s seems to be on a roll, with reduced costs, better efficiency and strong sales growth, but it can’t afford to rest on its laurels. Its competitors are raising advertising expenditure and competition may well get more intense, especially in the US as the summer winds down and holiday season approaches.
Hershey’s, the maker of Kisses amongst others, has announced impressive growth for Q2 2001. Net income reached $52.4 million or $0.38 per share, up 31% from last year’s $40.0 million or $0.29 per share. The company attributed a portion of the growth to its new mint and gum business, purchased last year from Nabisco, as well as growth in overseas markets.
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“The plan to manage our business for balanced, sustainable financial performance is evident in our results,” said Richard H. Lenny, President and CEO. “Looking ahead to the more important second half, we are encouraged by our plans for the key holiday seasons, and we continue to forecast achievement of our full-year financial results.”
Net sales were up 7.5%, from $836.2 million in Q2 2000 to $898.9 million. While overseas sales performed extremely well, the US market showed a slight decline. Hershey attributed this to a program of stock keeping rationalization begun last year, as well as retailer inventory de-stocking.
The company achieved strong gross margin improvements, largely due to lower logistics costs, favorable commodity costs and a more efficient supply chain. The savings created provided extra funds for marketing, which further boosted sales growth.
In total, H1 sales increased by 8.2% to $1.98 billion, compared to $1.83 billion for the first half of the previous year. Net income increased from $111.2 million or $0.80 per share to $131.3 million or $0.95 per share.
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By GlobalDataHershey has been doing well recently, but it is not all going to be smooth sailing. Its candy-making rivals are not going to sit back and watch Hershey continue to take market share. Other companies have also been raising their advertising expenditure and competition may well get more intense, especially in the US as the summer winds down and holiday season approaches.
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