Hershey’s Reports Sweet Profit Despite Price Increase

Hershey’s Reports Sweet Profit Despite Price Increase

The Hershey Company (NYSE:HSY), manufacturer of Hershey’s Kisses and Reese’s chocolates, beats analysts estimates with higher than expected second quarter earnings. Based on the company’s report, its net income was $135.7 million, or 59 cents per share. The result is higher than its $130 million, or 56 cents per share earnings, during the same period in 2011. The company reported $1.41 billion net sales, up by 7 percent.

Based on the data collected by Thomson Reuters I/B/E/S, the average estimate of analysts, excluding one-time items, was 61 cents. The chocolate maker’s earnings, excluding one-time item, were 66 cents per share.

Hershey attributed its solid second quarter earnings performance to higher prices on its products. The company observed consumers appetite for its chocolates and candies increased, after implementing an average 9.7 percent price increase.

The company’s earning s climbed by 4.4 percent, and they saw a  6.7% increase in sales. John P. Bilbrey, president and chief executive officer of Hershey, said the result of its earning is better than expected, and consumers adjusted “reasonably well” to its pricing.

In addition, Bilbrey said, “The investments we have made in our business over the last few years, have enabled us to deliver predictable, profitable, and sustainable growth, despite the challenging global macroeconomic conditions that continue to exist.”

Due to its positive performance, the company increased its adjusted earnings estimate by two percentage points, from 12 percent to 14 percent, or $3.17 to $3.23 per share, for 2012. Its previous growth forecast was10 percent to 12 percent. Including its Brookside acquisition, Hershey’s expects its sales growth rate to be 7 to 9 percent per year. The company also expects to report around $2.88 to $2.98 earnings per share, including 25 cents to 29 cents charges by the end of 2012.

Hershey also expected to increase its gross margin by 120 to 130 basis points.

The chocolate maker maintained its sales growth by increasing its advertisements, and by introducing new products Hershey’s drops and Reese’s minis. The company will continue to release its new products, including the Jolly Rancher Crunch & Chew candy, Ice Breakers Duo Mints, Rolo Minis, and Hershey’s Simple Pleasure chocolates, in the United States and in international markets.

The company’s stock value is up by 1.68 percent, to $ 71.51 on Friday (July 26, 2:55 ET).