Hershey records improved half-year results, despite supply chain challenges

The Hershey Company has posted its latest half-year results, which reveal an improved performance, delivering net sales $2.49 billion, up 5% year-on-year, writes Neill Barston.

As Confectionery Production has previously reported, US manufacturers, like many around the world, have grappled with inflation impacting on core ingredients including higher sugar and cocoa prices, that has had a notable influence on the sector.

However, Hershey, which recently released a broad product portfolio for 2023 at the Sweets & Snacks Expo in Chicago, stated its net sales for North America were up 4.4%, to $1.9 billion in the second quarter of the year, with its organic sales also up 4.8%, despite recording a physical decline in sales volume due to inventory issues and pricing structures.

Speaking to the company at this year’s National Confectioners Association organised Sweets & Snacks Expo (pictured), there appeared a strong degree of optimism within the business that its performance this year was continuing on an upward curve, despite background market testes.

Underlining this, in spite of wider industry supply chain challenges, the company reported that its gross margin stood at 45% for the quarter, compared to 42% in the same period last year, with price adjustments, productivity and its wide array of confectionery and snacks – including better-for-you options, reportedly compensating for increased costs for raw materials and labour.

Notably, its candy, mint and gum sales performed well in the quarter, up 9.6%, with the North American confectionery segment, achieving income of $657 million for the business, representing a 6.2% increase, while in the salty snack category, its sales were $272 million, with segment income of $43.8 million, up 7.4%.

Meanwhile, its international sales also received a boost, standing up 8.5% year-on-year, to $224 million, delivering profits of $41.1 million for the period, up 18% on the same period in 2022, resulting in an encouraging picture for the business, despite market complications around the world.

Michele Buck, The Hershey Company President and Chief Executive Officer believed the latest set of results set an encouraging tone for the year.

She said: “Our categories continue to perform well as consumer demand for great tasting snacks remains resilient across the globe.

“We delivered another quarter of strong net sales growth, gross margin expansion and double-digit earnings growth, enabling us to raise our full-year adjusted earnings outlook and increase our dividend 15%. New capacity and increased brand investment should enable us to sustain this momentum in the second half as we provide consumers with even more of their favourite snacks for seasonal celebrations and expand distribution across segments and markets.”