Hershey Q3 Profit Tops View, Backs FY13 Forecast

(RTTNews) - Chocolate maker Hershey Co. (HSY) reported Thursday that its third-quarter profit increased from last year on higher sales and volume as well as margin strength. Adjusted earnings per share topped analysts' estimates, while sales missed their view. Further, the company backed its fiscal 2013 earnings and sales forecast, and issued forecast for fiscal 2014.

President and Chief Executive Officer John Bilbrey said, "... we expect solid fourth quarter net sales growth that will result in a full-year 2013 net sales increase of about 7 percent, including the impact of foreign currency exchange rates."

For the third quarter, net income was $232.98 million or $1.03 per share, compared to $176.72 million or $0.77 per share, last year. Adjusted net income, which excluded certain items, was $236.62 million or $1.04 per share for the quarter, while last year's earnings were $199.45 million or $0.87 per share.

On average, 15 analysts polled by Thomson Reuters expected the company to report profit per share of $1.01 for the quarter. Analysts' estimates typically exclude special items.

Consolidated net sales increased 6.1 percent to $1.85 billion from $1.75 billion in the prior year. Analysts expected revenue of $1.88 billion for the quarter. Organic sales growth was 6.6 percent in the quarter.

Volume growth in the quarter was driven by core brand growth and new products in U.S. and key international markets.

In the quarter, gross margin of 46.1 percent increased 360 basis points from last year, while adjusted gross margin increased 300 basis points. The improvement reflected lower commodity costs, supply chain productivity and cost savings initiatives.

Looking ahead, for the full year 2013, the company continues to expect earnings per share of $3.60 to $3.65. Adjusted earnings per share is expected to be in the range of $3.68 to $3.71, a growth of around 14 percent from last year. The company continues to estimate that net sales will increase about 7 percent in 2013. Analysts expect profit per share of $3.71 on sales of $7.10 billion.

Hershey now expects full-year adjusted gross margin expansion of 240 to 250 basis points, versus a previous estimate of 220 to 230 basis points expansion.

Further, for the full year 2014, the company expects reported earnings per share of $3.97 to $4.09, and adjusted earnings per share of $4.01 to $4.12. Analysts expect the company to report earnings of $4.10 per share.

Hershey projects that 2014 adjusted earnings per share and net sales growth to be within its 9 percent to 11 percent and 5 percent to 7 percent long-term targets, respectively.

In pre-market activity, Hershey shares are currently trading at $97, up $0.15 or 0.15 percent.