Hershey reported that its confectionery sales rose by 2.1 percent as prices increased; however, it reported lower sales volume. The fourth quarter report released on Thursday also predicted a 2 to 3 percent increase in growth in 2024 as the company has already planned to increase the rates of its confectionery products. The company has said that prices could rise more as cocoa prices increase.
Hershey’s shares rose by about 5 percent in New York on February 8. This is the highest increase since July 2020. The stock has seen a rise of 4.2 percent in 2024 through Wednesday.
West Africa is the leading supplier of cocoa, and extreme weather in the region has affected cocoa production, leading to a rise in costs. Sugar, another main ingredient in manufacturing chocolate and confectionery, also increases prices.
On Thursday morning, New York cocoa futures hit a record high. This comes after prices had already doubled as extreme weather in West Africa hurt cocoa production in the region.
In a call with analysts, the Chief Financial Officer of Hershey said that cocoa and sugar are the most inflationary products.
CEO Michele Buck of the Pennsylvania-based chocolate and candy maker said that although cocoa could limit their earnings, their business strategies would enable Hershey to grow their “categories and profitably expand market share over time.”
Net sales in North America Salty Snacks saw a 6 percent increase to $1.09 billion in the fiscal year, while the Confectionery Division increased 7 percent to $2.22 billion.
The North America Confectionery Division saw a 2.1 percent increase to 2.22 billion in the quarter. According to CEO Buck, this fourth quarter increase in sales was attributed to Hershey witnessing a spurt in “Halloween and holiday” sales.
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