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The Hershey Company HSY reported solid fourth-quarter 2024 results, as both top and bottom lines improved year over year and beat the Zacks Consensus Estimate.
Management remains impressed with the strong consumer response to innovation, marketing initiatives and in-store execution. While rising cocoa prices are expected to create considerable pressure on 2025 earnings, the focus remains on sustaining top-line and market share growth, executing transformation and productivity initiatives, and positioning the company for long-term growth.
Hershey posted adjusted earnings of $2.69, which grew 33.2% year over year and beat the Zacks Consensus Estimate of $2.38.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Consolidated net sales of $2,887.5 million jumped 8.7% from the year-ago quarter’s tally, cruising past the Zacks Consensus Estimate of $2,850 million. On a constant-currency (cc) basis, organic sales advanced 9%, backed by favorable net price realization of nearly 3 points, additional shipping days, inventory timing gains and lapping of planned inventory declines in the North America Salty Snacks unit in the year-ago period.
Hershey Company (The) Price, Consensus and EPS Surprise
Hershey Company (The) price-consensus-eps-surprise-chart | Hershey Company (The) Quote
A Closer Look at HSY’s Results
Hershey’s adjusted gross margin was 44.8%, which expanded 60 basis points (bps). This upside was driven by net price realization, improved sales volume, supply chain productivity and a timing gain associated with the inventory valuation method, partly negated by elevated commodity costs and adverse sales mix.
Selling, marketing and administrative (SM&A) expenses decreased 5.5% as a result of reduced compensation and benefit costs and fewer investments in capability and technology, partly offset by elevated investments in advertising and related consumer marketing costs. Advertising and related consumer marketing expenses rose 2.4% year over year. Excluding advertising and consumer marketing expenses, SM&A expenses dropped 8.8%.
The adjusted operating profit of $696.8 million increased 28% year over year, while the respective margin expanded 360 bps to 24.1%. The upside was fueled by net price realization, greater sales volume, net savings from the transformation program, supply chain productivity and lower incentive compensation, partly countered by increased commodity costs and adverse sales mix.
HSY Provides Insights by Segment
Hershey's North America Confectionery segment reported net sales of $2,354.2 million, marking a 6% increase. Organic, cc net sales grew 5.9%, backed by nearly 4 points of price realization and around 2 points of volume gains.
For the 12 weeks ending Dec. 29, 2024, Hershey’s U.S. candy, mint and gum (CMG) retail takeaway in the multi-outlet plus convenience store channels rose 2.2%. The company’s CMG market share contracted 18 bps. Hershey's North America Confectionery segment income was $808.2 million, marking an 11.5% increase. As a result, the segment margin for the quarter was 34.3%, an expansion of 170 bps.
The North America Salty Snacks segment’s net sales of $278.9 million rose 35.9%. Volume rose nearly 41 points, with about 21 points of the decline associated with lapping planned inventory decreases. In addition, extra shipping days and shipment timing shifts to the fourth quarter contributed to the downside.
Excluding the impact of inventory and timing factors, the base business increased by low double digits, including a nearly 5-point headwind from net price realization. Hershey’s U.S. salty snack retail takeaway in the multi-outlet plus convenience store channels increased by 7.1% for the 12 weeks ending Dec. 29, 2024. The North America Salty Snacks segment income was $54.5 million, marking a major 424.1% increase. The segment margin improved to 19.5%, an increase of 1,440 bps year over year.
Hershey's International segment posted net sales of $254.5 million, reflecting 9.8% growth. Organic, cc net sales increased 15% on the back of volume increases in Mexico, Europe, the Middle East and Africa, and India. The International segment income came in at $29.6 million, up 44.7% year over year. As a result, the segment's profit margin expanded 280 bps to 11.6%.