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Issue Date: Vol. 52, No. 3, March 2012, Posted On: 2/24/2012

Hershey Raises 2012 Targets, Plans Seasonal Price Hikes

Emily Jed
Hershey Co., Hershey candy prices, Hershey price hike, chocolate prices, confectionery business, candy business, candy vending machine, candy supplies for vending, Twizzlers, Hershey bar, Kit Kat, Reese's Minis, Hershey's Drops, Rolo Minis

NEW YORK CITY – The Hershey Co. raised its 2012 earnings and sales growth targets after its fourth-quarter net income rose 4.9%. The maker of Reese's peanut butter cups, Twizzlers and Kit Kat bars said it anticipates higher sales volume in 2012. And while it expects costs for commodities such as cocoa and sugar to remain higher in 2012, the company anticipates higher better margins due to planned price increases and cost savings.

Hershey raised prices 10% on sales of candy last year in response to higher costs, and it plans a similar increase in 2012 during the key selling seasons of Easter, Halloween and Christmas. The company said a mix of seasonal-specific advertising, coupons and programming will help consumers adjust to the new price point.

For its latest quarter, Hershey reported net income of $142.1 million, or 62¢ a share, up from $135.5 million, or 59¢ a share, a year earlier. Sales rose 6% to $1.57 billion. Growth was fueled almost entirely by price increases, while volume rose slightly.

Fourth-quarter volume rose for its seasonal business, where the price increases hadn't taken effect yet, but fell on its core business, where higher prices were making their way to consumers. But Hershey executives said consumer resistance to higher prices was within expectations.

New products like Reese's Minis and Hershey's Drops have helped boost sales, and the chocolate giant plans some extensions to those lines, including Rolo Minis. Hershey has also been supporting its brands with advertising and plans to step up its promotional spending this year.

For 2012, Hershey now expects net sales to rise 5% to 7%, up from a prior target of 3% to 5%. Hershey said earnings should increase by 7% to 9%, up from its earlier 6% to 8% projection.

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