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Hershey Media Report 7/28/16
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UPDATE 2-Hershey's profit beats, net sales rise for 1st time this year
Jul 28, 2016 | Reuters
By Sruthi Ramakrishnan
Hershey Co, the maker of Hershey's Kisses and Reese's Peanut Butter Cups, reported a better-than-expected quarterly profit as stronger demand and a shift in the timing of shipments helped boost sales in North America, its biggest market. -
Hershey Posts Revenue Gain as It Swings to Profit
Jul 28, 2016 | Wall Street Journal
By Annie Gasparro
Hershey Co. said its U.S. candy sales will be lower than expected this year, as the chocolate giant beefs up its cost-cutting efforts after rejecting a buyout offer from Oreo cookie maker Mondelez International Inc. Hershey said it now expects its annual sales to rise 2%, down from its previous estimate of 2.5%, excluding the impact of foreign currency rates. The lower expectations—which follow a similar reduction in April—are primarily due to a slowdown in U.S. candy sales industrywide and ongoing economic challenges in China. -
Hershey sales rebound bolster takeover defense
Jul 28, 2016 | Financial Times
By Pan Kwan Yuk
Hershey offered a rebuke to critics of its decision to reject snack giant Mondelez’s unsolicited $23bn approach when the US chocolate maker on Thursday delivered stronger-than-expected second quarter results and raised its dividend payout. -
Attorney General Kathleen Kane to hold press conference regarding Hershey trust
Jul 28, 2016 | Pennsylvania Live
By Nick Malawskey
Pennsylvania Attorney General Kathleen Kane's office said she will hold a press conference Friday regarding the Milton Hershey School Trust. -
Attorney General plans Hershey Trust announcement
Jul 28, 2016 | Central Penn Business Journal
By Roger DuPuis
There will be an "announcement of importance" Friday afternoon concerning the Hershey Trust Co., according to the office of Pennsylvania Attorney General Kathleen Kane, though no details have been released. -
Pennsylvania AG to make announcement related to Hershey Trust, Bloomberg says
Jul 28, 2016 | The Fly
Pennsylvania Attorney General Kathleen Kane plans to hold a press conference on July 29 at 1:30 pm to make an announcement regarding the Hershey Trust, according to Bloomberg, citing an email from the AG's office. -
How Will Hershey (HSY) Stock Be Impacted by Q2 Beat?
Jul 28, 2016 | The Street
By Annie Palmer
Hershey (HSY) reported better-than-expected second quarter results before today's market open. The chocolate company posted earnings of 85 cents per share, exceeding analysts estimated 78 cents per share. Revenue came in at $1.638 billion, surpassing analysts estimated $1.61 billion. -
Hershey's Sweet Returns Belong in Your Portfolio
Jul 28, 2016 | The Street
By Richard Saintvilus
Shares of Hershey (HSY) are rising by more than 3% Thursday, reaching a session high of $111.76, or just above its 20-day moving average. And there could be more sweet gains up ahead. -
Hershey reports first quarter of sales growth in a year
Jul 28, 2016 | Food Dive
By Carolyn Heneghan
Hershey reported a 3.7% increase in revenue to $1.64 billion in the second quarter, its first sales increase in a year. Quarterly profit soared to $146 million, or 68 cents a share, compared to a loss of $99.9 million, or 47 cents a share, in the same quarter last year. -
E-Commerce sales rise 30% for Mondelez in H! as biscuit competition heats up
Jul 28, 2016 | Confectionery News
By Oliver Nieburg
Mondelez has identified e-commerce as core to future growth as it faces tough competition in US biscuits and weak demand in the Middle East. The company grew e=commerce revenues 30% in the first half of 2016 and aims to be online leader in snacks with a $1bn sales target by 2020. -
Bloomberg Markets
Jul 28, 2016 | Bloom
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UPDATE 2-Hershey's profit beats, net sales rise for 1st time this year
Jul 28, 2016 | Reuters
By Sruthi Ramakrishnan
July 28 (Reuters) - Hershey Co, the maker of Hershey's Kisses and Reese's Peanut Butter Cups, reported a better-than-expected quarterly profit as stronger demand and a shift in the timing of shipments helped boost sales in North America, its biggest market.
The company also reported its first rise in net sales this year, a 3.7 percent increase to $1.64 billion that beat the average analyst estimate of $1.61 billion.
Hershey, which rejected a $23 billion buyout offer from Mondelez International Inc in June, said it was looking at more opportunities to cut costs and spend less on advertising and marketing this year.
The company said it now expected to save about $135 million this year, up from its previous estimate of at least $100 million.
Hershey also reduced its capital expenditure budget to $265 million-$275 million for the year from $285 million-$295 million.
Since turning down the Mondelez offer, the charitable trust that controls Hershey has attracted a lot of attention, with one director resigning and the board agreeing in-principle to reform itself.
The agreement with the Pennsylvania Attorney General's office, the trust's sole overseer, could offer the clarity needed for Mondelez to make a new approach to acquire Hershey.
On its post-earnings conference call, Hershey declined to comment on the Mondelez offer.
Hershey said on Thursday sales volumes were higher than expected in North America as some shipments anticipated in the third quarter were made in the second quarter.
Hershey's net sales in North America rose 3.2 percent to $1.44 billion in the three months ended July 3.
The Hershey, Pennsylvania-based company posted a net profit of $146 million, or 68 cents per share, compared with a loss a year earlier.
Excluding items, Hershey earned 85 cents per share, handily beating the average analyst estimate of 78 cents, according to Thomson Reuters I/B/E/S.
However, the company cut its full-year net sales growth forecast to about 2 percent from 2.5 percent, in constant currency, citing slow sales growth in the United States and macroeconomic challenges in China.
Hershey shares were up 2.4 percent at $110.75 in early trading. Up to Wednesday's close, the stock had risen more than 11 percent since news of the Mondelez offer became public in late June.
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Hershey Posts Revenue Gain as It Swings to Profit
Jul 28, 2016 | Wall Street Journal
By Annie Gasparro
Hershey Co. said its U.S. candy sales will be lower than expected this year, as the chocolate giant beefs up its cost-cutting efforts after rejecting a buyout offer from Oreo cookie maker Mondelez International Inc.
Hershey said it now expects its annual sales to rise 2%, down from its previous estimate of 2.5%, excluding the impact of foreign currency rates. The lower expectations—which follow a similar reduction in April—are primarily due to a slowdown in U.S. candy sales industrywide and ongoing economic challenges in China.
Late last month, Mondelez made a $23 billion bid to buy Hershey, which Hershey’s board of directors unanimously rejected. Yet, Hershey’s stock price has experienced a sustained lift, recently up 15% since the news of the offer was first reported by The Wall Street Journal.
Any potential deal involving Hershey will face an unusual number of legal and political hurdles. Hershey’s largest shareholder is the Hershey Trust Co., which controls 81% voting power and is under pressure from the community to keep Hershey independent.
Hershey’s Chief Executive J.P. Bilbrey said he wouldn’t comment on hypotheticals.
But as Hershey’s performance continues to lag, the push for an acquisition gains momentum.
In the latest quarter, Hershey’s U.S. candy, mint and gum sales rose at a slower rate than the overall industry, which was also worse than expected.
Traditional candy faces growing competition from fruit-and-nuts bars, yogurt and other options Americans see as healthier. Stores are putting more of those snacks at the check-out aisle at the expense of chocolate.
Hershey bought Krave jerky last year, in an effort to broaden its reach.
But Mr. Bilbrey said Hershey’s response to “fast-changing retail and consumer trends over the past year or so has not been sufficient.”
“Our number-one priority is to restore Hershey’s marketplace momentum within the very profitable U.S. market,” he said, adding that the plan is better innovation, marketing and cost reduction.
Hershey said it had to add production capacity to meet rising demand for its new Reese’s Snack Mix and Hershey’s Snack Bites, and Kit Kat Big Kat is the top new item at some of its largest customers. Also, retailers’ demand for the new Reese’s Pieces Peanut Butter Cups has been double what Hershey expected.
Next month, Hershey plans to come out with its Krave meat-based protein bars, which combine ingredients like beef jerky, mango and quinoa.
For the second quarter, Hershey’s profit was $146 million, or 68 cents a share, compared with a loss a year ago. Revenue rose 3.7% to $1.64 billion.
Excluding the impact the stronger U.S. dollar had on overseas revenue, Hershey’s revenue rose 4.5%, and the amount of products it sold rose 3.1%.
Hershey’s chocolate business in China has been another thorn its side, since buying a local candy company there in 2014.
Mr. Bilbrey said he is cautiously optimistic that chocolate sales in China will improve, and Hershey expects net sales growth there in the second half of the year.
Hershey also said it would increase its quarterly dividend on its common stock to 61.8 cents from 58.3 cents previously.
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Hershey sales rebound bolster takeover defense
Jul 28, 2016 | Financial Times
By Pan Kwan Yuk
Hershey offered a rebuke to critics of its decision to reject snack giant Mondelez’s unsolicited $23bn approach when the US chocolate maker on Thursday delivered stronger-than-expected second quarter results and raised its dividend payout.
The company behind Hershey’s chocolate kisses and Reese’s peanut butter cups, reported sales of $1.63bn for the June quarter as demand recovered in North America and price increases helped offset the impact of the strong dollar on oversea sales.
The sales increase is the first recorded by Hershey in a year and was slightly better than the $1.61bn the market was expecting.
Net income came in at $145.9m, compared to a loss of $99.9m last year when it had to take a $249.8m write down on a company it acquired in China. And adjusting for one-time items, earnings of 85 cents a share, topped estimates for 78 cents.
The board of directors also approved a 6 per cent increase in quarter dividend payment on both its class A and class B stocks.
Hershey said:
This dividend increase reflects our confidence in Hershey’s marketplace position and long-term growth potential.
The results come as the Pennsylvania-based company, which is controlled by the Hershey Trust, contends with an unsolicited takeover offer from Mondelez.
Both companies are grappling with changing consumer tastes and stubbornly slow sales growth. Despite Hershey’s rebuff of its informal $107-a-share offer, many in the market reckon that Mondelez, whose brands include Oreo cookies and Cadbury chocolate, could return with a sweetened proposal.
One opening for Mondelez could be the continued weakness in Hershey’s business in China. Having ramped up its presence in Asia’s largest economy in 2013 through the acquisition of Shanghai Golden Monkey, Hershey’s has struggled to deal with the abrupt slowdown in sales there.
The tough trading conditions there prompted Hershey to lower its full year sales growth forecast to 1 per cent, down from its previous guidance of 1.5 per cent. It kept its earnings guidance unchanged at between $4.24-$4.28 per diluted share.
Explaining the change in outlook, Hershey said:
As expected, China gross sales declined in line with expectations due to the challenging macroeconomic and competitive environment. China chocolate category retail sales sequentially improved in the second quarter versus the trends in the first quarter and second half of last year.
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Attorney General Kathleen Kane to hold press conference regarding Hershey trust
Jul 28, 2016 | Pennsylvania Live
By Nick Malawskey
Pennsylvania Attorney General Kathleen Kane's office said she will hold a press conference Friday regarding the Milton Hershey School Trust.
Kane's office said last week it had reached a resolution to an ongoing investigation of the trust company board, which, the Attorney General's office indicated in a letter to the board, had failed to comply with the requirements of a 2013 agreement between the two parties.
The Hershey Trust board oversees the Hershey Trust Co., which manages the $12 billion-plus endowment left by Milton S. Hershey to fund the private Milton Hershey School in Derry Township. It includes a controlling stake in the Hershey Co. and outright ownership of Hershey Entertainment & Resorts company. It operates through a series of interlocking boards — the school board, the trust company board, the board of the chocolate company and the board of the entertainment company. Both the school and the trust company share the same board members, while some members also sit on the boards of the two for profit companies.
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Attorney General plans Hershey Trust announcement
Jul 28, 2016 | Central Penn Business Journal
By Roger DuPuis
There will be an "announcement of importance" Friday afternoon concerning the Hershey Trust Co., according to the office of Pennsylvania Attorney General Kathleen Kane, though no details have been released.
AG office spokesman Jeffrey A. Johnson today said he had nothing to add in advance of the announcement beyondwhat was previously released regarding a tentative deal between the agency and the charitable organization.
The trust's 10-member panel, whose purview includes the Milton Hershey School Trust, The M.S. Hershey Foundation Trust and the Hershey Cemetery Trust, has been under scrutiny from the AG's office over issues such as its members' compensation, tenure and expenses.
The trust also has been in the news recently because it is The Hershey Co.'s main stockholder, controlling more than 80 percent of the company's voting shares — which gives the body significant leverage over any possible sale of the Dauphin County candy company.
Three members of the trust's board also sit on the board of Dauphin County-based Hershey Co., whose board on June 30 rejected a $23 billion purchase proposal from Illinois-based Mondelez International, a Kraft Foods spinoff whose brands include Oreo Cookies.
Trust spokesman Kent Jarrell today would say only "that we look forward to the announcement."
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Pennsylvania AG to make announcement related to Hershey Trust, Bloomberg says
Jul 28, 2016 | The Fly
Pennsylvania Attorney General Kathleen Kane plans to hold a press conference on July 29 at 1:30 pm to make an announcement regarding the Hershey Trust, according to Bloomberg, citing an email from the AG's office.
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How Will Hershey (HSY) Stock Be Impacted by Q2 Beat?
Jul 28, 2016 | The Street
By Annie Palmer
NEW YORK (TheStreet) -- Hershey (HSY) reported better-than-expected second quarter results before today's market open.
The chocolate company posted earnings of 85 cents per share, exceeding analysts estimated 78 cents per share. Revenue came in at $1.638 billion, surpassing analysts estimated $1.61 billion.
Last year, the company reported earnings of 78 cents per share on revenue of $1.58 billion.
Hershey estimates its 2016 net sales will increase approximately 1% and its earnings to increase by 3% to 4% in the range of $4.24 to $4.28.
In June, Mondelez (MDLZ) made a $23 billion offer to purchase Hershey, which was unanimously rejected by Hershey's board of directors. The offer valued Hershey at $107 per share.
Shares of Hershey closed down 1.23% to $108.19 in Wednesday's trading session.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate HERSHEY CO as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
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Hershey's Sweet Returns Belong in Your Portfolio
Jul 28, 2016 | The Street
By Richard Saintvilus
Shares of Hershey (HSY) are rising by more than 3% Thursday, reaching a session high of $111.76, or just above its 20-day moving average. And there could be more sweet gains up ahead.
On Thursday, the global chocolate company reported second-quarter earnings results that beat estimates on both the top and bottom lines. The company's pricing advantage, which led to the earnings beat, underscores why Hershey stock has been one of my recommendations over the past six months.
Hershey has returned as much as 40%, rising from around $83 to around $118 on June 30. I wrote on its growth prospects on Jan. 25; a month later, at around $91 per share, I suggested its dividend deserved some patience.
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Today the stock is trades around $110 after a stint near $118 after Mondelez's(MDLZ) $23 billion merger bid, which Hershey rejected. The stock' value could drive Hershey stock higher from here.
Thanks to better-than-expected demand for products like Reese's Peanut Butter Cups and its Kisses candy, Hershey reported a revenue increase this year, beating estimates. That highlights the fact that the company's recent price increase has helped sales, not hurt them, as had been feared.
The company's improved pricing power would explain why Mondelez was willing to pay a premium for the company.
Hershey is now looking for ways to boost earnings even higher by strategic cost cuts. That justifies the expensive stock price. Although the forward price-to-earnings ratio of 25 is 8 points above the P/E of the average stock in the S&P 500 (SPX) index, Hershey's earnings are now expected to rise at a faster rate than revenue, both in fiscal 2016 and fiscal 2017.
From a technical perspective, Hershey stock has downside support at around $106, or 4% lower. Though the shares met resistance at around $117 per share (the red line) on the news of Mondelez's bid, Hershey stock could reclaim that level in the second half of the year, heading into the Halloween shopping season.
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Hershey reports first quarter of sales growth in a year
Jul 28, 2016 | Food Dive
By Carolyn Heneghan
Dive Brief:
Hershey reported a 3.7% increase in revenue to $1.64 billion in the second quarter, its first sales increase in a year. Quarterly profit soared to $146 million, or 68 cents a share, compared to a loss of $99.9 million, or 47 cents a share, in the same quarter last year.Hershey also lowered its sales expectations for the year due to weak growth in confections in North America and continued macroeconomic struggles in China.
Dive Insight:
Excluding currency impact, Hershey's quarterly sales rose 4.5%, with a 4% increase in organic sales thanks to higher volumes.
The company continues to struggle in its candy, mint and gum segment, though gum was a fast-falling category overall as of earlier this year, according to Nielsen data. At the same time, Hershey is looking ahead to launches of new products like protein bars under the Krave jerky brand or its Reese's Pieces Peanut Butter Cups. The latter is a hybrid innovation that won Hershey the "best in show" award for most innovative new product at the Sweets & Snacks Expo.
Hershey also continues to pursue brand acquisitions and internal product development, particularly in the realm of protein — a stark contrast to its predominantly chocolate and confections portfolio. The company announced itspurchase of barkTHINS premium chocolate brand in April and its regional launch of SoFit brand protein-based products in January. Indulgence continues to be a focus, but this diversification to include more better-for-you snacks could be a key to sustaining company growth.
Hershey continues to be a speculated target for Mondelez, and Hershey's return to revenue growth this past quarter is welcomed news to Mondelez if it still plans to enter another offer. In its own earnings report this week, Mondelezreported a 17.7% decline in revenue, due in part to the loss of income from its divested coffee business.
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E-Commerce sales rise 30% for Mondelez in H! as biscuit competition heats up
Jul 28, 2016 | Confectionery News
By Oliver Nieburg
Mondelez has identified e-commerce as core to future growth as it faces tough competition in US biscuits and weak demand in the Middle East.
The company grew e-commerce revenues 30% in the first half of 2016 and aims to be online leader in snacks with a $1bn sales target by 2020.
It comes as the company posted 1.5% organic growth in its Q2 results and announced plans to launch Milka in China this September.
$1bn online sales target
Speaking during the company's second quarter earnings calls yesterday, Irene Rosenfeld said: "While only a small part of our business today, we have significantly bolstered our capabilities in e-commerce."
Mondelez has partnered with Amazon in the US and teamed with Alibaba in China in April. It has also added personalized gift and subscriptions on brand such as Oreo in the UK.
Rosenfeld said: "Although online snacks are relatively under-developed, we believe e-commerce will be increasingly important as consumer purchasing behavior changes.
"Our intent is to capture share in this fast-growing channel by leveraging our strong brands and marketing knowhow."
Alibaba key to Milka launch in China
Rosenfeld said e-commerce was a key channel in China and it would leverage its Alibaba partnership for the Milk launch.
"We actually see close to 10% of snacks being purchased online [in China], and it's one of the drivers of the partnership that we struck with Alibaba," she said.
Mondelez sees gifting and subscription in Chinese e-commerce and also hopes to move outside the modern cities in wholesale.
Rosenfeld said she saw online subscriptions prospects for "brands like belVita."
Competition in biscuits
Mondelez said aggressive trade spending from competitors in biscuits had damaged its market share in the US and Brazil. It posted revenue declines in the biscuits category in both countries for Q2.
"...The Q2 numbers were largely impacted by the US biscuit situation," said Rosenfeld.
"So that's clearly a place where we're deploying trade spend," said Mondelez CFO Brain Gladden.
The company also experienced a low single-digits decline in its biscuits category in China in Q2, and said currency and volume headwinds had pressured margins in Brazil.
Regaining biscuits share
But Mondelez believes it can claw back its biscuits market share in these markets in the second half of 2016.
The company said it planned to innovate in US biscuits with several new items and would invest in direct store delivery.
"In Brazil, we're investing in additional advertising and consumer support while selectively narrowing price gaps on key SKUs," said Gladden.
Middle East demand
Mondelez's Q2 organic revenues declined 2.3% in its Eastern Europe, Middle East & Africa (EMEA) region.
Gladden said this was driven by a slowdown in Middle East and North Africa, where low oil prices and geopolitical volatility is harming consumer demand.
"A very weak Ramadan season in the Middle East also tempered the top line," he added.
Gladden highlighted Saudi Arabia, Nigeria, Yemen and Syria as particularly challenging markets.
Hershey bid and product trimming
Rosenfeld said during the earnings call the company had "no additional comments to make" on its failed $23bn bid for Hershey or merger & acquisition plans.
Gladden said: "SKU rationalization has been ongoing" but refused to comment further.
Mondelez added during the call it would up advertising and commercial support for its power brands in the second half of 2016 in light of "challenging markets"m particularly in emerging economies.
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Jul 28, 2016 | Bloom
Brief mention of Mondelez bid in the context of Hershey earnings. View clip here: http://beta.criticalmention.com/app/#clip/view/23610540?token=62151cc1-f0c4-428e-ae39-3abb7329609b
Rough transcript: Hershey coming out with earnings per share that rose 9%, sales up 3%. the company raising its dividend 6%. Also Hershey executives saying on the call today that they will not be commenting further at this time on the offer from Mondelez. Those shares up about 2% today Mark.
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