US confectionery group Hershey has released its second-quarter results, revealing a 3.4% drop in sales, to $1,707.3 million, attributed to the effects of trading difficulties during the ongoing coronavirus crisis.
Hershey reports that its net income for the second quarter, ending 30 June, was $268.9 million, representing a downturn of 12.8%, yet president and CEO Michele Buck said the company’s staff had performed significantly well during testing conditions.
She said, “we delivered profitable sales growth in North America in the second quarter despite the increased complexities presented by the COVID-19 pandemic. Our iconic brands and great execution enabled us to gain 225 basis points of confectionery market share.”
In addition, strong cost management enabled us to offset many of the COVID-19 related financial pressures and deliver adjusted earnings per share in line with last year.
“I could not be prouder of how the company focused its time and resources on our employees’ physical, emotional and economic well-being while serving the needs of our customers, consumers and communities during this difficult time. We are encouraged by the improvements in our business performance and the momentum we have exiting the second quarter. We believe our great brands, advantaged margin structure, strong supply chain, and agile investment mindset will enable us to deliver solid stockholder returns going forward.”
2020 Full-Year Financial Outlook Summary
As the company noted, with the operating environment continuing to evolve, and the firm’s performance improved over the course of the second quarter.
The impact of recent spikes in coronavirus cases on consumer mobility, retail operations, government regulations, and the macroeconomic environment, however, remains unclear.
As a result, the company is not providing new fiscal 2020 guidance at this time.
Significantly, the company said it expected accelerated sales growth in the second half of the year based on momentum exiting the second quarter, assuming no significant disruption to current consumer trends.
Hershey reports also that it expects pricing and cost management to drive margin expansion in the second half of the year.
We remain confident that our healthy balance sheet and strong cash flow will enable us to meet current business needs, invest for the future and return cash to stockholders.
Hershey reports again that in the North America segment, the business added that it expects stronger second-half sales growth driven by continued elevated at-home consumption, price realisation, the replenishment of retailer and distributor inventory levels, and recovering sales in foodservice and specialty retail channels.
The company does not currently expect seasonal performance to have a material effect on second-half financial results, though the ramifications of a resurgence of COVID-19 cases on consumer participation in seasonal activities and the resulting retail impact remains uncertain.
In the International and other segments, the business expects a slower recovery given current travel, retail, government and macroeconomic trends.
Sales trends are expected to improve versus the second quarter; however, will fall short in the second half versus the prior year by double digits.
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