Hershey Cuts Full-year Sales Growth Outlook; Announces Productivity Initiative

(RTTNews) - The Hershey Company (HSY) said it expects full-year 2015 net sales to increase around 2.5% to 3.5%, including a net benefit from acquisitions and divestitures of about 1.5 percentage points and unfavorable foreign currency exchange of approximately 1.5 percentage points.

Earlier, the company estimated full-year net sales to increase 4.5% to 5.5%.

Excluding unfavorable foreign currency exchange rates, full-year net sales are expected to increase about 4.0% to 5.0%. This is less than the previous estimate of 6.0% to 7.0%, primarily due to lower than expected confectionery category growth within the China modern and traditional trades that has impacted the company's chocolate and SGM businesses.

The company expects full-year reported earnings per share to be in the $3.62 to $3.79 range and adjusted earnings per share to be in the $4.10 to $4.18 range, an increase of 3% to 5% versus 2014, including dilution from acquisitions and divestitures of around $0.20 per share. Analysts expect earnings of $4.31 per share for the full-year.

Separately, Hershey announced the implementation of a new productivity initiative as part of its ongoing efforts to drive long-term growth and margin-enhancement.

The program is expected to generate pretax savings of $65 million to $75 million, primarily in 2016, of which a portion will be reinvested back into the company.

The program is expected to result in the reduction of approximately 300 jobs by the end of 2015, with estimated pre-tax charges and costs of $100 million to $120 million, or $0.29 to $0.35 per share, the majority of which are cash and will be incurred in 2015.

As part of this initiative, Hershey also announced changes to its Global Leadership Team to better deliver the company's strategy, support its core business, and position Hershey to capitalize on adjacent and international growth opportunities.