The Hershey Company (NYSE: HSY) has released its financial results for the first quarter ending March 31, 2024, along with reaffirmation of its outlook for the full year of 2024. Michele Buck, President and CEO of The Hershey Company, expressed satisfaction with the strong start to the year, emphasizing the company’s commitment to achieving its business strategies and financial targets for the year ahead.
Buck highlighted the success of investments in innovation, marketing, and in-store execution, which have led to increased consumer engagement and enhanced market share performance across various segments. Additionally, the successful operation of a new ERP system marks a significant milestone in achieving agility and efficiency targets.
Amidst recent business volatility, the company remains steadfast in its dedication to strategies fostering long-term growth and sustainable value creation. The outlook for 2024 includes several key expectations:
- An anticipated reported and adjusted effective tax rate of around 13%.
- Other expenses, primarily reflecting the write-down of equity investments eligible for a tax credit, estimated to be between $220 million to $230 million.
- Interest expense projected to be approximately $165 million to $175 million, reflecting a higher interest rate environment.
- Capital expenditures expected to range from $600 million to $650 million, driven by core confection capacity expansion and ongoing investments in digital infrastructure, including the enhancement of a new ERP system.
- Anticipated savings of $100 million from the Advancing Agility & Automation Initiative.
Notably, the projected earnings per share-diluted for 2024 exclude the impact of mark-to-market gains and losses on commodity derivative contracts until the related inventory is sold, due to the inability to forecast market changes accurately.
The company also provided insights into its approach to presenting certain percentage changes in net sales on a constant currency basis, aiming to exclude the influence of foreign currency exchange fluctuations for meaningful historical comparisons.
First-Quarter 2024 Consolidated Results:
- Consolidated net sales surged by 8.9% to reach $3,252.7 million in the first quarter of 2024. Organic, constant currency net sales rose by 8.6%, primarily driven by price realization.
- Gross margin reported a significant increase from 46.3% to 51.5% compared to the first quarter of 2023, primarily attributed to price realization and derivative mark-to-market gains.
- Operating profit saw a notable increase of 32.3% to $1,058.1 million in the first quarter of 2024, resulting in a reported operating profit margin of 32.5%. This growth was propelled by sales growth, price realization, productivity gains, and derivative mark-to-market gains, which offset commodity inflation and increased investments.
- The effective tax rate for the first quarter of 2024 decreased to 19.1%, driven by an increase in renewable energy tax credits compared to the same period last year.
First-quarter 2024 results, as per GAAP standards, included items impacting comparability negatively, totaling $197.1 million, or $0.82 per share-diluted. Conversely, for the first quarter of 2023, items positively impacting comparability totaled $30.7 million, or $0.11 per share-diluted.
