UPDATE: Hershey 4Q Profit Up; Co Open To Making Acquisitions
02 Febrero 2010 - 9:35AM
Noticias Dow Jones
Hershey Co. (HSY) reported a 54% jump in its fourth-quarter
profit due to better pricing and improved supply-chain
efficiencies, and the U.S. confectioner said it is open to making
acquisitions to speed up growth.
On a conference call, Chief Executive David West said the
company's management and board unanimously decided not to bid for
Cadbury PLC (CBY) after a "thorough and complete examination." The
company is still open to growing through mergers and acquisitions,
he said, adding that it will evaluate future acquisition
opportunities in "the same disciplined manner."
Emerging markets, which have faster rates of growth and where
the company has recently made small deals and joint ventures, will
continue to be the focus for acquisitions.
Shares of Hershey--which hiked its dividend and reported
better-than-expected earnings--were recently up 1.6% to 37.41.
The company said it has strong cash flow and that it continues
to have board level discussions on potential uses of cash.
The candy maker also boosted its quarterly dividend by 7.6% to
32 cents a share and projected 2010 earnings to rise 6% to 8% on
net sales growth in the 3% to 5% range, a view it said was
consistent with its long-term objective. Analysts polled by Thomson
Reuters predict earnings of $2.28 a share, or up 7%, on sales of
$5.5 billion, a 4% increase from 2009.
Hershey, which has been boosting its marketing spending, said it
will continue to invest in its brands and its international
markets. The company said advertising was up 50% in the fourth
quarter and the increase helped push sales of its brands. For this
year, the company expects advertising to be up 25% to 30% from a
year earlier.
Hershey, which currently gets the bulk of its sales from the
slow-growth U.S. market, is limited in its ability to push
overseas, and the company is facing growing competition from its
larger rivals. Industry consolidation by Mars Inc. , which bought
Wm. Wrigley Jr. Co. in 2008 and Kraft Foods Inc.'s (KFT) planned
takeover of U.K. confectioner Cadbury PLC (CBY, CBRY.LN) has put
Hershey in a difficult position as a smaller player in the global
confectionary market.
On the conference call, West said the board and management are
still confident in the company's prospects and that the global
confectionary category still offers opportunities to expand.
On Tuesday, Hershey posted a profit of $126.8 million, or 55
cents a share, up from $82.2 million, or 36 cents a share, a year
earlier. Excluding charges associated from the company's
restructuring, earnings rose to 63 cents from 59 cents.
Net sales grew 2.2% to $1.41 billion. Analysts expected earnings
of 60 cents on net sales of $1.42 billion. Gross margin jumped to
40.5% from 36.1% as costs fell.
The company expects pressure on drug store sales in the first
half of the year but said overall it expects to do well on
chocolate sales during the Easter holiday.
-By John Kell and Anjali Cordeiro, Dow Jones Newswires;
212-416-2480; john.kell@dowjones.com
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