Hershey Quarterly Profit Falls; CFO West Becomes Chief Operating Officer
Chocolate maker Hershey on Wednesday said fourth quarter earnings fell 10%, below analysts' forecasts, as sales fell and a product recall hurt results.
The company also announced that it named its chief financial officer, David J. West, to the chief operating officer post to focus on day-to-day operations. West will remain CFO while a search for a new CFO is underway. West will report to Hershey Chairman and Chief Executive Richard Lenny, who will continue to focus on the company's strategic direction and innovation.
Hershey, which was hit by a product recall in Canada and a temporary plant closure, posted profit of $153.6 million, or 65 cents a share, for the fourth quarter, compared with $170.4 million, or 69 cents a share, a year earlier.
Excluding restructuring charges, earnings were 67 cents a share. Analysts polled by Thomson Financial expected profits of 71 cents a share.
Sales fell nearly 1% to $1.34 billion.
In November, Hershey briefly closed a plant in Canada and recalled products such as Hershey bars, Reese's Peanut Butter Cups and Oh Henry! bars after salmonella bacteria turned up.
The maker of Hershey's Kisses, which in October said it was losing U.S. market share to Mars Inc., is trying to focus on growing its core products and developing new lines like premium dark chocolate.
That strategy is a shift from recent years, when the company was able to outperform most foodmakers by relying on short-term limited edition variations of current products to increase sales. That strategy turned less successful as retailers became less willing or able to sell all the new products Hershey offered.
The company stood by its 2007 forecast calling for sales to increase 3% to 4%, with earnings per share from operations up 7% to 9%.