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Issue Date: Vol. 53, No. 3, March 2013, Posted On: 2/7/2013

Stronger Sales Boost Hershey's Q4 Profit

Emily Jed
TAGS: vending, vending machine candy, Hershey Co., Hershey 2012 fourth quarter, Kit Kats, Reese's, confectionery business, Hershey investments, Hershey profit

HERSHEY, PA -- Chocolate giant Hershey Co. saw net income rise 5.5% in the 2012 fourth quarter, as sales of its Kit Kats and Reese's, among other candy products, boosted revenue. The company said it gained market share across all categories (chocolate, nonchocolate, mint and gum) during the three months ended Dec. 31, and raised its outlook for the year.

Hershey earned $149.9 million, or 66₵ a share, in the recent quarter, up from $142.1 million, or 62₵ a share, in the year-ago period. Sales rose 12% to $1.75 billion from $1.56 billion a year earlier.

The company said its adjusted gross margin during the 2012 fourth quarter improved on higher pricing and cost savings, but that was partially offset by higher ingredient costs. Selling, marketing and administrative expenses, including advertising, rose 19%.

Hershey plans to step up investments in five brands in the coming year: Hershey's, Reese's, Hershey's Kisses, Jolly Ranchers and Ice Breakers. It described these brands as ones that "can transcend borders around the world."

For the full 2012, Hershey earned $660.9 million, or $2.89 per share, up from $628.9 million, or $2.74 per share, in 2011. Revenue rose to $6.64 billion from $6.08 billion. Hershey raised its earnings forecast to an increase of 10% to 12% to $3.56 to $3.63 a share, above the 8% to 10% increase previously forecast.

The candy giant reaffirmed its projection for total sales for the year to increase by 5% to 7%, driven primarily by higher volume.

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