Chocolate company trading update

The Hershey Company has announced its sales and earnings for the first quarter ended March 30, 2014.

Highlights from the update included:

• Net sales increase 2.4% including a 0.8 point negative impact from foreign currency exchange rates.
• Earnings per share-diluted of $1.11 as reported and $1.15 adjusted
• Outlook for 2014 net sales and adjusted earnings per share-diluted reaffirmed:
•  Full-year net sales expected to increase 5-7%, driven primarily by volume
• Reported earnings per share-diluted expected to be $3.99 to $4.08
• Adjusted earnings per share-diluted expected to increase 9-11% and be in the $4.05 t0 $4.13 range

“The profile of Hershey’s results for the first quarter was slightly below our expectations,” said John P. Bilbrey, president and chief executive officer, The Hershey Company. “Given U.S. Brookside distribution gains in the year ago period, the timing of our more meaningful innovation later this year, and softness in Latin America, first quarter organic net sales growth was pressured. Additionally, U.S.  retail trends varied and were impacted by lower consumer trips in the  instant consumable channels and irregular purchasing patterns within the  traditional food and mass channels. However, towards the end of the first quarter, consumer trends began to normalize and, while preliminary, April Nielsen data indicates a good sell through for the Easter season and a sequential improvement in non-seasonal candy.

“During the first quarter we also made solid progress against the initiatives we discussed earlier this year, giving us confidence Hershey will deliver on its 2014 expectations of 5 to 7 percent net sales growth, including the impact of foreign currency exchange rates, and a 9 to 11 percent increase in adjusted earnings per share-diluted. Net sales are expected to accelerate over the remainder of the year driven by core brands and innovation as well as the necessary amount of advertising and  related consumer marketing. Specifically, our new product pipeline is robust. In the U.S., York Minis and Hershey’s Spreads instant consumable items launch in late May and Ice Breakers Cool Blasts Chews and Brookside Crunchy Clusters are expected to ship in the third quarter. In key international markets we will continue to build on Hershey’s chocolates and Hershey’s Kisses momentum and will begin a broader rollout of Reese’s Peanut Butter Cups in the second half of the year.”