Hershey 4Q results surpass market expectations with 2021 profit forecast
Strong demand for Hershey’s favourite treats, including Twizzlers, S’mores and Candy Dish, during the coronavirus pandemic and recent price increases on some products has led to profit and sales forecasts for 2021 above market expectations, the company announced on Thursday, 4 February.
- Hershey projects 2021 net sales to grow by 2% to 4%, compared with analysts’ average estimate of a 2.94% rise.
- It also expects full-year earnings per share to grow by 6% to 8%, while analysts on average expect a rise of 5.73%.
Michele Buck, The Hershey Company President and Chief Executive Officer, said: "2020 was a year of unexpected challenges and hardship, but also one that brought opportunity, resilience and compassion. We are proud to be an important part of comfort and connection in people's lives. Our portfolio of beloved brands remains extremely relevant with consumers, and our dedicated team, advantaged capabilities and operational excellence allowed us to help create many moments of goodness for them during these unprecedented times.”
North America (US and Canada)
Hershey's North America segment net sales were $1,973.9m in the fourth quarter of 2020, an increase of 8.9% versus the same period last year. Volume contributed 7.9 points, driven by strong seasonal performance.
"We delivered a strong quarter with continued share gains and volume growth to finish the year. While the impact of key external factors on our business remains uncertain, we have good momentum going into 2021 with visibility into a strong start to the year. We anticipate we will deliver another year of balanced sales and earnings growth in 2021," said Buck.
Hershey's US candy, mint and gum (CMG) retail takeaway increased 4.1%, resulting in a category market share gain of 159 basis points. This gain was largely driven by strong sales of Hershey's chocolate brands, which increased 5.9% versus the prior year period.
Sales of Hershey's baking items, including peanut butter, syrup, chips and cocoa continued to remain strong, increasing 12.1%. Hershey's salty snacks also performed well, increasing 14.5% in the 12-week period. This strength was partially offset by a 20.4% decline in Hershey's refreshment products as the functional need for breath freshening continues to be impacted by social distancing.
International and Other
Fourth-quarter 2020 net sales for Hershey's International and Other segment decreased 17.3% versus the same period last year to $211.3m. Volume softness was largely driven by reduced sales at the company's owned retail locations. While retail locations reopened during the third quarter of 2020, foot traffic remained suppressed given reduced consumer travel and capacity restrictions imposed by government regulations. In addition, consumer mobility and economic security continued to challenge international markets, and the change in China's operating model also attributed to the net sales decline.
Combined net sales in Mexico, Brazil, India and China decreased 28.7%. Excluding an 8.9 point headwind from foreign currency exchange rates, combined organic constant currency net sales in Mexico, Brazil, India and China declined approximately 19.8%.
The International and Other segment reported a $7.9m loss in the fourth quarter of 2020, reflecting a 156.3% decrease versus the prior year period profit of $14.1m. Profit declines were driven by the COVID-19 related sales declines, which were partially offset by marketing and overhead cost optimisation.
- For more information see Full Earnings Press Release.