The Hershey Company’s (HSY – Free Report) earnings and revenues beat the Zacks Consensus Estimate in third-quarter 2017. Growth in its core brands, successful innovation and progress in multi-year productivity, and cost-saving initiatives helped the company post better numbers.

Earnings & Revenue Discussion

Hershey’s third-quarter adjusted earnings per share of $1.33 beat the Zacks Consensus Estimate of $1.28 by 3.9%. Earnings also increased from the year-ago profit level of $1.29 by 3.1%.

Net sales of $2.03 billion surpassed the Zacks Consensus Estimate of $2 billion. Net sales also improved 1.5% year over year owing to strong demand for Kisses, Kit Kat and Chocolate Dipped Pretzels. This marks the sixth straight quarter of sales rise after a few quarters of no growth.

Organically, excluding the impact of currency, sales increased 1.1% as demand strengthened in the United States.

Volume grew 0.7% while net price realization had a 0.4% benefit. Currency favorably impacted revenues by 0.4%.

Hershey Company (The) Price, Consensus and EPS Surprise

Hershey Company (The) Price, Consensus and EPS Surprise | Hershey Company (The) Quote

Quarterly Segment Discussion

North America (U.S. and Canada) net sales increased 1.6% to $1.79 billion and currency benefited sales by 0.3%. Pricing benefited 0.3%, while volumes increased 1.6%.

Third-quarter net sales at the International and Other segment grew 0.8% to $240.7 million. Currency had a positive impact on sales by 1.3%. Excluding currency, sales declined 0.5% due to pricing gains. While volumes posed a 5.2% headwind, pricing benefited 4.7% to sales.

Constant currency sales were solid (about 8%) in Mexico, Brazil and India. Net sales in China remained on par with the year-ago level.

Margins Detail

Hershey’s adjusted gross margin declined 30 basis points (bps) to 45.3% due to higher freight rates as well as manufacturing and distribution costs. Again, unfavorable sales mix also had a negative impact on gross margins.

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