Hershey, PA – The Hershey Company overcame persistent supply chain disruptions in the most recent quarter to deliver double-digit sales growth in each of its business segments. Management has raised its full-year outlook to reflect continued strong demand and increased prices across its portfolio, which are expected to be driven by higher costs and higher advertising and trading levels in the coming months.
Net income for the second quarter ended July 3 was $315.6 million, equivalent to $1.53 per share, up from $301.2 million or $1.45 per share in the prior-year period. Excluding unusual items including derivative mark-to-market losses, business realignment activities, acquisition activities and other miscellaneous losses, adjusted net income was $372.4 million, up from adjusted net income of $305.8 million in the year-ago quarter.
Net sales totaled $2.4 billion, up 19% from $2 billion a year ago. Setting aside the benefit of currency impacts from last year’s acquisitions of Dot, Pretzels and Lilly, Hershey’s organic net sales grew 14%, driven by pricing and volume gains.
“Second quarter growth was broad-based, with each segment delivering double-digit sales growth, resulting in strong earnings per share,” said Michele G. Buck, president and chief executive officer, said in pre-recorded remarks ahead of July 28. Earning Call. “The 14% increase in organic net sales was driven by both value and volume gains, while acquisitions contributed another 5 points of growth. Despite persistent, broad-based supply chain disruptions, our teams increased production output and inventory during the quarter. This will not only drive sales growth, but also improve marketplace share performance and help us fully activate our portfolio in the second half of the year.
While inflation continues to pressure many Americans, consumers are still buying branded snacks and candy instead of lower-priced private label items in those categories, Ms. Buck said.
“I think in snacking, what we see is consumers like their brands a lot,” Ms. Buck said. “So if you look at Total Food, because the budget is tight, of course, private label brands have increased the share with snacking, private label doesn’t and consumers like their brands.”
In the second quarter, North America Confectionery segment earnings increased 12% to $618.9 million on the back of pricing and volume gains, partially offset by higher supply chain costs, acquisition costs and increased trade show and travel expenses versus the prior year. Were. The segment’s net sales increased 13% to $1.9 billion compared to the same period last year. Steady consumer demand and rising prices led to a 5% increase in sales of candy, mint, and gum in the United States.
“As we look into the second half, we expect our higher inventory levels and increased advertising and merchandising to share strong everyday sales and performance,” said Ms. Buck. “Chocolate media spend is projected to grow in double digits in the second half, and quality sales are expected to grow as well.
“Seasonal consumer engagement is expected to remain high, and we expect high single-digit sales growth for both our Halloween and holiday seasons. Despite this strong growth, we continue to fully support consumer demand due to capacity constraints. will not be able to complete.
“As many of our everyday and seasonal products are made on the same line, we need to balance production over the past several months to improve daily on-shelf availability and build seasonal inventory at the same time. Although this results in a second While seasonal stock will be under pressure in the half-year, we expect our daily share trends to remain strong on the back of higher inventory levels and more advertising and sales.”
Revenue for the North America Salty Snacks segment jumped 44% to $37.4 million, as pricing advantages and higher volumes offset unfavorable mix, acquisition-related costs and higher supply chain costs. Segment net sales increased 100% to $256.3 million, driven largely by the acquisition of Dot and Pretzels as well as, in part, net worth realization.
“Our salty snacks brand continues to deliver tremendous growth and share gains,” said Ms. Buck. “Over the past 12 weeks, SkinnyPop’s retail sales grew 17% and the share of the ready-to-eat popcorn segment increased 130 basis points to 24%. The growth is led by higher home penetration and stable procurement rates as the new pack size has enabled us to capture incremental opportunities.
“Pirates’ loot also continues to gain homes through distribution gains, while velocity remains strong resulting in 32% retail sales growth in the latest 12-week period. and 45% retail sales over the past three months. With sales growth and share gains of 340 basis points, Dot’s pretzel growth continues to outpace the pretzel category.
“To support this continued, advanced growth, we continue to advance our strategic plan to optimize our salty snacks supply chain for additional capacity and margin capacity.”
Hershey’s International segment profit was $30.7 million, up $3.1 million from the year-ago period, partially offset by higher supply chain and logistics costs, advertising investments, salary and benefits inflation and increased travel expenses. And the net worth shows the realization. International segment net sales increased 21% from the year-ago quarter to $207.2 million.
“Consumer demand remains strong across markets, with distribution and innovation driving double-digit growth in each market during the quarter,” said Ms. Buck, top of Hershey’s Kiss in India and Mexico. Better innovation for you as demonstrators.
For the full year, executives now expect net sales growth of 12% to 14% for the year, up from previous guidance of 10% to 12%. Reported growth per share is expected to be in the 9% to 12% range, compared to previous guidance of 8% to 11%.
Shares of the Hershey Company rose to $224.27 on the New York Stock Exchange on July 28, a 2.8% increase from its previous close of $218.23.