Vending

Hershey Q4 2020 sales and earnings rise, surpassing market expectations

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February 4, 2021

The Hershey Co.'s net sales rose 5.7% from $2.068 billion in last year's fourth quarter to $2.18 billion for the quarter ending Dec. 31, 2020, according to an earnings release.

Non-GAAP income rose from $269.32 million in the 2019 fourh quarter to $312.16 million in 2020. Non-GAAP diluted earnings per share rose from $1.28 in the 2019 fourth quarter to $1.49 in 2020.

The company declared a 80.4 cents dividend payable March 15 for shareholders of record on Feb. 19.

The company's revenue boost surpassed analyst expectations by $70 million, according to Seeking Alpha, while the non-GAAP $1.49 earnings per share beat expectations by 6 cents and the $1.39 GAAP EPS missed expectations by 4 cents.

Shares traded at $146.58 today against a 52-week range of $109.58-$158.28.

"2020 was a year of unexpected challenges and hardship, but also one that brought opportunity, resilience and compassion," Michele Buck, president and CEO, said in the release. "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."

Reported gross margin was 44.0% in the fourth quarter of 2020, compared to 44.1% in the fourth quarter of 2019, a decrease of 10 basis points, driven by lower derivative mark-to-market commodity gains. Adjusted gross margin was 43.9% in the fourth quarter of 2020 compared to 43.4% in the fourth quarter of 2019, an increase of 50 basis points driven by volume and price realization.

Selling, marketing and administrative expenses increased 4.0% in the fourth quarter of 2020 versus the fourth quarter of 2019 driven by advertising increases in the North America segment.

Fourth-quarter 2020 reported operating profit of $405.1 million increased 41.6% versus the fourth quarter of 2019, resulting in an operating profit margin of 18.5%, an increase of 470 basis points. The increase was primarily the result of impairment charges recognized in 2019 to write down long-lived and intangible assets associated with Krave.

Adjusted operating profit of $429.3 million increased 15.9% versus the fourth quarter of 2019, resulting in an adjusted operating profit margin of 19.6%, an increase of 170 basis points versus the fourth quarter of 2019 driven by strong volume gains in the North America segment.

Full year sales rose 2% from $7.986 billion in 2019 to to $8.149 billion, while net income attributable to the company rose from $1.149 billion to $1.278 billion.

For 2021, the company expects performance in line with its long-term growth algorithm of 2-4% net sales growth and 6-8% earnings per share growth.

In the North America segment, the company expects recent performance and momentum to continue into the first quarter of 2021 due to sustained elevated sales of take home and seasonal chocolate as well as additional marketplace share gains. Second quarter and second half results are expected to moderate given strong 2020 performance. In the international and other segment, the company expects stabilizing sales trends across most markets.