Hershey 3Q net income rises; lifts outlook

AP News
Posted: Oct 21, 2010 1:37 PM
Hershey 3Q net income rises; lifts outlook

The Hershey Co.'s third-quarter net income rose 9 percent and the company raised its full-year guidance, but the candy maker sounded a cautious note about 2011.

The maker of Reese's peanut butter cups and Twizzlers said its net income for the three months ended Oct. 3 totaled $182.9 million, or 79 cents per share. That's up from $168.5 million, or 73 cents per share and matches the 79 cents per share analysts polled by Thomson Reuters, on average, predicted.

Revenue rose 4 percent to $1.55 billion, from $1.48 billion last year. That is shy of the $1.56 billion analysts expected

Hershey said the timing on some shipments at the end of the quarter was delayed and will be recorded in the fourth quarter.

Hershey, based in Hershey, Pa., said its market share is up, year-to-date.

Hershey now expects net income of $2.52 to $2.56 per share, excluding one-time items, for the year. That is up from the prior range of between $2.47 and $2.52 per share. Analysts expect $2.53 per share.

"As we plan for 2011 we believe macroeconomic challenges and consumer confidence will continue to be a headwind," CEO David West said.

The company expects 2011 revenue to rise 3 percent to 5 percent while net income rises between 6 percent to 8 percent.

Hershey expects costs to rise in 2011, but said it would work to mitigate that by cutting costs.

Candy makers' key season, Halloween, is fast approaching.

"While Halloween is off to a good start, we'll continue to work closely with key customers over the next 10 days to monitor consumer reaction and shopping behavior," West said.

Hershey has two product introductions upcoming this year: Hershey Drops _ similar to M&M's without the candy shell _ and Reese's Mini's.

Hershey has been working to cut costs and has pumped more money into advertising. For the full year, advertising spending is expected to be up 50 percent to 60 percent for the year, up from previous guidance of 45 percent to 50 percent.

"We'll increase spending on brands on which we initiated activity earlier this year," West said. "Reese's, Mounds, Almond Joy and York have responded to the ad spending."

Shares fell $1.48, or 2.9 percent, to $49.62 during midday trading.