Hershey's Mixed Bag: Stable Q4 Earnings Amid Slow Sales Growth And Rising Cocoa Costs

Hershey Company HSY reported fourth-quarter fiscal 2023 sales of $2.66 billion, a slight increase of 0.2% year-over-year, missing the consensus of $2.70 billion.

Adjusted EPS was $2.02 (flat YoY), above the consensus of $1.95. Gross margin contracted 90 bps YoY to 42.3%, and gross profit declined 1.9% Y/Y to $1.12 billion.

Operating margin contracted 238 bps to 17.5%, and the operating income for the quarter was $464.33 million (-11.8% Y/Y).

North America Confectionery segment net sales rose 2.1% Y/Y to $2.22 billion. Sales for the North America Salty Snacks segment fell 24.6% to $205.16 million, and the International segment increased by 12.7% to $231.71 million.

Hershey held $401.90 million in cash and equivalents as of December 31, 2023.

Also Read: Hershey’s Pricing Power Continues To Sweeten Sales, Drive Growth: Analyst

“While historic cocoa prices are expected to limit earnings growth this year, we believe our strong marketing plans, innovation and brand investments will drive top-line growth and meet consumers’ evolving needs. We are elevating our focus on productivity and transformation to strengthen our business and deliver peer leading performance over the long-term,” commented Michele Buck, The Hershey Company President and Chief Executive Officer.

Dividend: The company announced quarterly dividends of $1.370 on the Common Stock and $1.245 on the Class B Common Stock, an increase of 15% or $0.178 and $0.162 per share, payable March 15, 2024, to stockholders of record as of February 20, 2024. 

2024 Outlook: Hershey expects net sales growth of 2%-3% and adjusted EPS to be flat YoY at $9.59 versus the $9.82 consensus. The company sees capital expenditures of ~$600 million to $650 million.

Price Action: HSY shares are trading higher by 5.56% at $205.07 on the last check Thursday.

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