The Hershey Co. forecast full-year profit above Wall Street expectations on Thursday, after the company beat estimates for quarterly profit on strong holiday demand and higher prices for its chocolates and candy.
Packaged food-makers are grappling with rising prices for commodities, such as sugar, wheat and soy, as well as soaring shipping and labour expenses, as supply chains were strained during the pandemic.
Product Prices Increase
“Pricing will be an important lever for us this year and is expected to drive most of our growth,” said Michele Buck, chief executive officer.
However, Buck cautioned that a surge in Omicron cases has hit the company’s facilities, as well as its suppliers, due to higher absenteeism, and it has pressured production at the facilities.
Buck expects this to impact the speed at which the chocolate-maker can rebuild inventories and accelerate investments in demand-generating activities, which will likely be limited until the second half of the year.
The Pennsylvania-based company expects an annual adjusted profit of between $7.84 and $7.98 per share, compared with estimates of $7.57 per share.
Net sales rose to $2.33 billion in the quarter ended 31 December, from $2.19 billion a year earlier, compared with estimates of $2.27 billion, according to Refinitiv IBES data.
Net income attributable to the company rose to $355.6 million, or $1.62 per share, in the fourth quarter, from $291.4 million, or $1.39 per share, a year earlier.
Excluding one-time items, the company earned $1.69 per share, beating the average analyst estimate of $1.62 per share, according to Refinitiv IBES data.