The Hershey Company (HSY) Q4 2024 [Q&A] earnings summary

Executive summary

• Positioned for balanced top and bottom line growth in 2026, leveraging pricing, productivity, and efficiency levers to offset elevated cocoa costs.

• EPS growth in 2026 is targeted even if cocoa prices remain high, with upside potential if prices decline.

• CEO succession process is underway, with a focus on a seamless transition and continued execution of the 2025 plan.

• Q4 2024 net sales rose 8.7% to $2.89B; full-year 2024 net sales up 0.3% to $11.2B, driven by innovation and strong in-store execution.

• Q4 reported net income surged 130.6% year-over-year to $796.6M; adjusted EPS up 33.2% to $2.69.

Financial highlights

• Q4 organic, constant currency net sales up 9.0%; full-year organic, constant currency net sales up 0.4%.

• Q4 reported gross margin expanded 1170 bps to 54.0%; adjusted gross margin up 60 bps to 44.8%.

• Fourth quarter benefited from a $40 million timing gain related to inventory valuation from a new ERP system.

• Q4 reported operating profit up 102.3% to $939.1M; adjusted operating profit up 28.0% to $696.8M.

• International segment saw strong Q4 growth, aided by favorable laps and Black Friday, but full-year growth was modest.

Outlook and guidance

• 2025 net sales expected to grow at least 2%, mainly from price realization.

• 2025 reported EPS projected to decline in the high-40% range; adjusted EPS to fall in the mid-30% range, reflecting higher commodity costs and tax rates.

• 2025 sales outlook is muted due to conservative elasticity assumptions, international pressures, retailer inventory adjustments, and one fewer shipping day.

• Guidance assumes historic elasticities at minus one, with potential upside if elasticities improve.

• Low single-digit growth expected in the second half of 2025, with shipping day differences having a minor net impact.