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Hershey's profit beats, net sales rise for 1st time this year

Hershey's
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Hershey, the maker of Hershey's Kisses and Reese's Peanut Butter Cups, reported a better-than-expected quarterly profit as stronger demand and a shift in the timing of shipments helped boost sales in North America, its biggest market.

The company also reported its first rise in net sales this year, a 3.7 percent increase to $1.64 billion that beat the average analyst estimate of $1.61 billion.

Hershey, which rejected a $23 billion buyout offer from Mondelez in June, said it was looking at more opportunities to cut costs and spend less on advertising and marketing this year.

The company said it now expected to save about $135 million this year, up from its previous estimate of at least $100 million.

Hershey also reduced its capital expenditure budget to $265 million to $275 million for the year from $285 million to $295 million.

Since turning down the Mondelez offer, the charitable trust that controls Hershey has attracted a lot of attention, with one director resigning and the board agreeing in-principle to reform itself.

The agreement with the Pennsylvania Attorney General's office, the trust's sole overseer, could offer the clarity needed for Mondelez to make a new approach to acquire Hershey.

On its post-earnings conference call, Hershey declined to comment on the Mondelez offer.

Hershey said on Thursday sales volumes were higher than expected in North America as some shipments anticipated in the third quarter were made in the second quarter.

Hershey's net sales in North America rose 3.2 percent to $1.44 billion in the three months ended July 3.

The Hershey, Pennsylvania-based company posted a net profit of $146 million, or 68 cents per share, compared with a loss a year earlier.

Excluding items, Hershey earned 85 cents per share, handily beating the average analyst estimate of 78 cents, according to Thomson Reuters I/B/E/S.

However, the company cut its full-year net sales growth forecast to about 2 percent from 2.5 percent, in constant currency, citing slow sales growth in the United States and macroeconomic challenges in China.

Hershey shares were up 2.4 percent at $110.75 in early trading. Up to Wednesday's close, the stock had risen more than 11 percent since news of the Mondelez offer became public in late June.