Hershey Plunges as Sluggish U.S. Candy Sales Weigh Down Earnings
(Bloomberg) -- Hershey Co. plunged the most in more than a year after its quarterly sales and profit missed analyst estimates, weighed down by poor performance in the pivotal U.S. market.
The shares dipped as much as 6.2 percent to $103.51 on Thursday in New York, the biggest intraday drop since August 2016.
Hershey’s sales dipped 1.6 percent in the fourth quarter, hampered by weak demand for chocolate in the U.S. The company’s forecast for 2018 also disappointed investors, despite an expected boost to the bottom line from the tax reform packaged passed last year.
Hershey’s ill-fated expansion into China also remains an issue: Sales in its international division slid 5.4 percent in the quarter, with a 30 percent plunge in the world’s most populous country.
Hershey, which generates close to 90 percent of its revenue from selling candy in the U.S., has been under pressure to diversify its lineup of products as consumers change how they eat and shop. The company recently agreed to buy Amplify Snack Brands Inc. for roughly $921 million, acquiring the maker of SkinnyPop popcorn as it pushes into salty snacks. That came after company bought a beef jerky company in early 2015.
It wasn’t all bad news for chocolate in the fourth quarter. Mondelez International Inc., which makes Cadbury and Milka, said its global sales were up 5 percent, with strong results in Europe and Brazil. Mondelez has a limited presence in the U.S. chocolate market, but has tried to expand sales there after a failed bid to buy Hershey in 2016.
The strong international sales helped Mondelez beat profit estimates for the quarter, sending its shares higher. The snack giant gained as much as 4 percent to $46.18 on Thursday, the biggest intraday gain in three months.
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