Hershey sweetens annual profit forecast even as demand wavers By Reuters

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<span>© Reuters. FILE PHOTO: An employee shows a Hershey’s chocolate bar made in USA in the “American lifestyle” store in Berlin, Germany, August 13, 2018. REUTERS/Fabrizio Bensch/File Photo</span><br />
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<p>By Mehr Bedi</p>
<p>(Reuters) -Hershey raised its full-year adjusted profit forecast on Thursday, bolstered by price increases for the Reese’s peanut-butter cups maker’s chocolates and candy even as demand starts to falter.</p>
<p>Big names in the packaged food industry, including Kellogg (NYSE:), Coca-Cola (NYSE:) Co and Hershey, have hiked product prices multiple times over the past year to counter a jump in costs of everything from ingredients to transportation caused by supply chain snags that were compounded by the Russia-Ukraine war.</p>
<p>Hershey has benefited from the price increases, boosting the chocolatier’s bottom-line and margins, but it also saw a 2.7% decline in volumes in the second quarter.</p>
<p>“As we look at volume in the back half, year-over-year, we expect it to be down, but it really is price driven,” Chief Financial Officer Steven Voskuil said on an earnings call.</p>
<p>Amid pushback from the price increases, the candy maker is making efforts to appeal to budget-conscious shoppers. The company is in discussions with dollar stores to introduce Dot’s Pretzels as part of an effort to grow the brand beyond its core Midwestern base.</p>
<p>“The quarter wasn’t quite as strong as the EPS beat implied,” JP Morgan analyst Ken Goldman said, flagging a weaker performance in the Salty Snacks division than what the company anticipated.</p>
<p>Shares of Hershey, which also increased its quarterly dividend by 15%, fell 1.5% in early morning trade.</p>
<p>Net sales of $2.49 billion in the quarter fell short of analyst expectations of $2.50 billion, but the company still expects to meet its previous forecast of approximately 8% net sales growth in 2023. </p>
<p>The Pennsylvania-based company now expects full-year adjusted profit per share to increase to between $9.46 and $9.54, compared with its prior forecast of about $8.52.</p>
<p>Excluding items, it earned $2.01 per share for the quarter, above estimates of $1.91 per share.</p>
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