Tags: hershey | china | earnings | profit

Hershey Reports Flat Sales, Cuts Forecast on Weak China Demand

Friday, 07 August 2015 02:10 PM

Chocolate maker Hershey Co. reported flat quarterly sales for the first time in over five years as volumes fell in North America due to price hikes and demand was weak in China.

The maker of Hershey's Kisses and Reese's Peanut Butter Cups also cut its full-year sales forecast for the fourth time.

The company's shares fell about 4 percent on Friday.

Slowing economic growth in China has weakened spending on non-essential consumer items, including Hershey's Kisses chocolates, which are popular gift items.

Hershey said it faced more competition in China as rivals increased discounts and promotions to boost sales after weak consumer spending during the Chinese New Year shopping period.

The company also said that profit and sales in its China-based Shanghai Golden Monkey candy and snacks business have been way below its expectations.

"None of us are happy with the developments around the Shanghai Golden Monkey acquisition and integration," Chief Financial Officer Patricia Little said on a conference call.

Hershey said it would replace Shanghai Golden Monkey's chairman. The company also said it expected to buy the remaining 20 percent stake in the business in the fourth quarter and was determining the price.

Hershey bought 80 percent in Shanghai Golden Monkey last year for about $394 million and was scheduled to buy the remaining stake for about $98 million in September.

The 121-year old company is under pressure also in the United States, its biggest market, as consumers increasingly turn calorie-conscious.

Hershey's volumes in North America were hurt in the second quarter also after it raised prices last year to reflect higher cocoa and milk costs. The price hikes boosted North America net sales by 1.8 percent to $1.40 billion in the quarter ended July 5.

Sales in markets outside North America fell 12.1 percent.

Hershey cut its net sales growth forecast for 2015 to about 1.5-2.5 percent from 2.5-3.5 percent.

The company reported a net loss of $99.9 million, or 47 cents per share, compared with a year-earlier profit, mainly due to a $249.8 million non-cash goodwill impairment charge related to Shanghai Golden Monkey.

Excluding items, Hershey earned 78 cents per share.

Net sales were flat at $1.58 billion.

Analysts on average had expected earnings of 75 cents per share and revenue of $1.62 billion, according to Thomson Reuters I/B/E/S.

Hershey's shares were down 3 percent at $89.30 on the New York Stock Exchange in morning trading.

© 2018 Thomson/Reuters. All rights reserved.

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Chocolate maker Hershey Co.reported flat quarterly sales for the first time in over five years as volumes fell in North America due to price hikes and demand was weak in China.
hershey, china, earnings, profit
Friday, 07 August 2015 02:10 PM
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