Hershey announces drop in Q3 profits; points to rising dairy costs
HERSHEY, Pa. Hershey Co. has a bellyache from the rise of dairy costs.
Known as the largest candy maker in the U.S., the company reported that its third-quarter profit plunged 66 percent and sales unexpectedly fell as it lost its market share.
Net income declined to $62.8 million, or 27 cents per share. Sales dropped 1.2 percent to $1.4 billion. The company, which accounts 11 percent of its sales outside the U.S., had not disclosed the impact the weaker dollar had on earnings.
The candymaker has experienced several setbacks over the past few years. On Oct. 5, the company announced a new chief executive officer would replace Richard H. Lenny by Dec. 1.
During his years at the helm, the company did not recover from its stumble last year while attempting to put more emphasis on what it considered a “fast growing, high-margin segment”: organic and dark chocolates.
In the midst of these impediments, Lenny had sought to expand Hershey’s reach with joint ventures in Asia to keep up with competitors. Additionally, Hershey announced it would close six U.S. and Canadian plants and cut more than 3,000 workers in the two countries, including 900 total at its namesake town, and shift more of its production to contractors and a new plant under construction in Mexico.
Meanwhile, Mars Company, Hershey’s main rival, has trumped the competition by increasing its share of the U.S. candy market through the sale and distribution more varieties of its notable candy, M&Ms, among others.
Hershey increased prices in April for the first time in two years. The price increase had “little impact” on the quarter because it was cancelled out by discounts Hershey had previously promised to retailers, chief financial officer Bert Alfonso said on the financial earnings call.
Hershey shares dropped $1.21 to $43.08 in New York Stock Exchange composite trading Wednesday afternoon.
Coca-Cola reports profit rose 13 percent in Q3
ATLANTA he Coca-Cola Co., the world’s largest beverage maker, reported Wednesday a 13 percent increase in third-quarter profit on a double-digit increase in sales.
Beating market expectations, Atlanta-based Coca-Cola said it earned $1.65 billion, or 71 cents per share, compared to a profit of $1.46 billion, or 62 cents per share, for the same period a year ago.
Revenue in the quarter rose 19 percent to $7.69 billion, compared to $6.45 billion a year ago.
In morning trading on Wednesday, Coca-Cola shares rose 95 cents to $58.71.
Tiger picks personal name-brand flavors in Gatorade deal
CHICAGO Golfers can’t get a swing like Tiger Woods, but they can swig like him, due to the introduction of his sports drink, the Associated Press reported Tuesday.
The world’s No. 1 golfer signed a licensing agreement with beverage company Gatorade. By March, AP said, the company will introduce “Gatorade Tiger” in March, with more products to follow.
The beverages, sponsored and used by athletes, are used for hydration during intense activity. Several athletes, including Michael Jordan and NFL quarterback Peyton Manning have endorsed the products, though none of them had licensing agreements with the PepsiCo subsidiary.
Terms of the deal were not disclosed, although Golfweek magazine reported last month the contract would span over five years and could pay Woods as much as $100 million, moving him closer to the $1 billion mark in career endorsements.
“Gatorade has been part of my game plan for years, whether I’m training or competing, so this is an ideal match,” Woods said in a statement. “I’m eager to launch my first signature product in a few months and look forward to developing additional sports performance beverages with Gatorade in the coming years.”