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Hershey Forecasts 2024 Sales And Profit Below Estimates, Announces Job Cuts

By Reuters
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Hershey Forecasts 2024 Sales And Profit Below Estimates, Announces Job Cuts

Hershey has forecast full-year sales and profit below estimates and said it would cut jobs that will impact less than 5% of its workforce.

The maker of Hershey's Kisses and Reese's Peanut Butter Cups said it would incur up to $60 million in costs related to severance.

Hershey said it was introducing a new multi-year productivity initiative to improve supply chain and manufacturing-related spending, optimise selling and general and administrative expenses, to generate long-term savings.

Hershey estimates that the initiative will result in total pre-tax costs of $200 million to $250 million from inception through 2026.

Despite taking several rounds of price hikes over the past two years in a bid to counter higher cocoa, sugar and labor costs, Hershey has slackened to protect its margins from higher input costs and a stronger US dollar.

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Cocoa Prices

The company said it expects to see higher cocoa prices to limit earnings growth this year.

Hershey's organic sales volumes fell 6.6% in the fourth quarter, as inflation-weary customers cut back spending on the company's expensive chocolates and candies.

"Consumers are spending less during non-seasonal periods, a trend that will likely continue throughout 2024," said CFRA Research's analyst Arun Sundaram.

Rival Mondelēz International also saw its volumes take a hit in the fourth quarter as price hikes deterred customers from spending on its products, especially in the North America segment.

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Hershey said 2024 net sales are expected to increase between 2% and 3% year-on-year, compared with analysts' estimates of growth of 3.4%, as per LSEG data.

It sees the annual adjusted profit per share to be flat, compared with a year earlier. Analysts were expecting adjusted earnings growth of 3.3% to $9.82 per share.

As of 31 December, 2022, the company employed about 18,075 full-time and 1,790 part-time employees worldwide, according to a regulatory filing.

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