The Hershey Company (HSY) investor relations material

Executive summary

• Leadership transition underway with Kirk, an experienced CPG executive, set to take over as CEO in mid-August, with continued focus on brand investment and sustainable growth strategies.

• Net sales rose 26.0% year-over-year to $2,614.7 million in Q2 2025, driven by strong brand investments, innovation, and effective execution.

• No need for a business reset identified; consistent reinvestment in brands, technology, and capabilities has driven efficiency and momentum despite recent headwinds.

• Reported net income fell 65.2% to $62.7 million, while adjusted EPS declined 4.7% to $1.21.

• Optimism expressed regarding potential tariff relief on cocoa and ongoing margin recovery initiatives.

Financial highlights

• Announced significant price increases to address cocoa-driven COGS inflation, with mid-teens price mix expected to flow through in 2026.

• Price increases alone will not fully offset cocoa inflation, but combined with cost savings and transformation initiatives, margin recovery is expected.

• Reported gross margin dropped to 30.5% from 40.2% year-over-year, mainly due to derivative losses and higher costs.

• Adjusted gross margin was 38.1%, down 510 basis points.

• Tax rate headwinds of 250 basis points expected to persist into 2026 due to sourcing strategies and lower income impacting tax credits.

Outlook and guidance

• On-algorithm earnings and top-line growth expected for 2026, with potential for upside if cocoa prices or tariffs improve.

• 2026 gross margin expansion of 500 basis points targeted before offsets from cocoa and tariffs; 80% of profit benefit from pricing to occur in 2026.

• Full-year 2025 net sales growth expected to be at least 2%.

• Reported EPS guidance revised to down ~50%; adjusted EPS expected to decline 36–38%.

• Tariff expenses projected at $170–$180 million for the year.