HERSHEY, Pa.--(BUSINESS WIRE)-- The Hershey Company (NYSE: HSY) today announced sales and earnings for the first quarter ended April 5, 2015. Consolidated net sales were $1,937.8 million compared with $1,871.8 million for the first quarter of 2014. Reported net income for the first quarter of 2015 was $244.7 million or $1.10 per share-diluted, compared with $252.5 million or $1.11 per share-diluted for the comparable period of 2014.
Highlights
- Net sales increase 3.5% including the impact of acquisitions and divestitures and foreign currency exchange rates
o Net acquisitions and divestitures a 1.6 point benefit
o Unfavorable foreign currency exchange rates a 1.1 point headwind
- First-quarter earnings per share-diluted of $1.10 as reported and $1.09 adjusted
- Outlook for 2015 updated:
o Full-year net sales expected to increase 4.5% to 5.5%, including a net benefit from acquisitions and divestitures of about 2.5 points and an increase in unfavorable foreign currency exchange to about 1.5 points
o Gross margin to increase 155 to 165 basis points versus a previous 135 to 145 basis points
o Full-year earnings per share-diluted growth reaffirmed
First-Quarter Performance
Consolidated net sales were $1,937.8 million in the first quarter, an increase of 3.5% versus the first quarter of 2014. Excluding the effect of foreign currency translation, which was greater than our estimates, net sales increased 4.6% versus the year ago period. Net price realization, primarily in the U.S., was a 3.8 point benefit. Volume was off 0.8 points due to Easter timing, volume elasticity related to the previously mentioned price increase and the slowdown in China, partially offset by growth in Canada, Mexico and Brazil. Net acquisitions and divestitures was a 1.6 point benefit.
North America net sales were slightly better than expectations, primarily due to timing, despite greater than expected unfavorable foreign currency exchange related to the Canadian dollar. International and Other net sales, excluding the benefit of the Shanghai Golden Monkey acquisition and unfavorable foreign currency exchange rates, were about the same level as last year due primarily to the aforementioned softness in China.
Adjusted gross margin was 46.6% in the first quarter of 2015, compared to 46.5% in the first quarter of 2014. The 10 basis point increase was driven by supply chain productivity and costs savings initiatives, as well as net price realization, which more than offset higher input costs.
Advertising and related consumer marketing expense increased about 8% in the first quarter, relatively in line with expectations. Selling, marketing and administrative (SM&A) expenses, excluding advertising and related consumer marketing, increased about 15%. Excluding the Shanghai Golden Monkey acquisition, SM&A expenses excluding advertising and related consumer marketing increased about 10%, relatively in line with expectations. Consolidated adjusted EBIT declined 5.6% to $393.8 million in the first quarter of 2015, compared to $417.1 million in the first quarter of 2014. Shanghai Golden Monkey results were dilutive in the first quarter due to the timing of innovation which will occur in the second half of the year. For the full year, the company continues to expect Shanghai Golden Monkey to be slightly accretive. View full report here.
