The Hershey Company (HSY) Q4 2023 (Q&A) earnings summary

Executive summary

• FY 2023 sales and adjusted EPS grew, while Q4 sales were nearly flat and reported profit declined; 2024 guidance anticipates flat EPS amid elevated cocoa and sugar costs.

• Management cited seasonal demand resilience and innovation, with increased productivity and transformation efforts intended to strengthen long-term performance.

Financial highlights

• Q4 net sales rose 0.2% to $2,657.1M; organic constant-currency sales decreased 0.1%, as 6.5 points of net price realization were offset by lower volume and planned salty-snacks inventory declines.

• Q4 reported net income was $349.0M and diluted EPS $1.70; adjusted diluted EPS was $2.02, flat YoY.

• FY net sales increased 7.2% to $11,165.0M; reported net income rose 13.8% to $1,861.8M and diluted EPS to $9.06; adjusted diluted EPS rose 12.6% to $9.59.

• Q4 reported operating profit declined 11.8% to $464.3M; adjusted operating profit declined 2.0% to $544.2M.

Outlook and guidance

• 2024 net sales growth forecast at 2%–3%, primarily from net price realization; reported and adjusted EPS growth expected to be approximately 0%.

• Reported EPS projected at $9.00–$9.11; adjusted EPS excludes one-time ERP and incremental cost-savings initiative costs.

• Higher cocoa and sugar costs, ERP implementation costs, and planned cost-savings charges are expected to more than offset sales, pricing, productivity, efficiencies, and a lower tax rate.

• Transformation initiatives target $300M of ongoing savings by 2026, net of reinvestment, including $100M expected in 2024; estimated pre-tax charges are $200M–$250M, with $110M in Year 1.

• 2024 effective tax rate projected at ~13%; interest expense at $165M–$175M and other expense at $220M–$230M.