Hershey Co.'s (HSY) fourth-quarter profit jumped 54% due to
better pricing and improved supply-chain efficiencies.
The candy maker also boosted its quarterly dividend by 7.6% to
32 cents a share and projected 2010 earnings to rise 6% to 8% on
net sales growth in the 3% to 5% range, a projection it said were
consistent with Hershey's long-term objective. Analysts polled by
Thomson Reuters predicted $2.28 a share, or up 7%, on sales of $5.5
billion, a 4% increase 2009.
Hershey--which currently gets the bulk of its sales from the
slow-growth U.S. market--is limited in its ability to push overseas
and the company is facing growing competition from its larger
rivals. Industry consolidation by Mars Inc., which bought Wm.
Wrigley Jr. Co. in 2008 and Kraft Foods Inc.'s (KFT) planned
takeover of U.K. confectioner Cadbury PLC (CBY, CBRY.LN) has put
Hershey in a difficult position as a second tier player in the
global confectionary market.
Last month, Goldman Sachs Group Inc. (GS) referred to Hershey's
expected growth as "uninspiring," and said earnings will be
pressured in the near term by elevated cocoa, sugar and dairy
prices. The firm also noted Hershey will need to boost advertising
spending to maintain market share.
On Tuesday, Hershey posted a profit of $126.8 million, or 55
cents a share, up from $82.2 million, or 36 cents a share, a year
earlier. Excluding charges associated from the company's
restructuring, earnings rose to 63 cents from 59 cents.
Net sales grew 2.2% to $1.41 billion.
Analysts expected earnings of 60 cents on net sales of $1.42
billion.
Gross margin jumped to 40.5% from 36.1% as costs fell.
Shares closed Monday at $36.81 and were inactive in premarket
trading.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com