Hershey Has Sweet Quarter S'mores to Come

Reuters

Wednesday, January 28, 2004; 1:21 PM

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NEW YORK (Reuters) - Hershey Foods Corp. , the biggest U.S. chocolate maker, on Wednesday reported higher fourth-quarter earnings, helped by lower promotional costs and strong sales of new products.

The popular new S'mores bars and Swoops chips will be followed in April by a low-carbohydrate chocolate bar, according to Chief Executive Richard Lenny.

The Hershey, Pennsylvania, company reported quarterly net income of $145 million, or $1.10 per share, compared with $130.3 million, or 96 cents a share, a year earlier.

The two periods included pre-tax charges for rationalization and realignment initiatives, such as the sale of gum brands and streamlining supply chains.

Excluding these charges, fourth-quarter income was $152 million, or $1.16 a share, compared with $138 million a year ago, or $1.02 a share.

On that basis, the maker of Hershey's Kisses and Reese's Peanut Butter Cups beat analysts' average view of $1.14 a share, according to Reuters Research, a unit of Reuters Plc.

Hershey's net sales for the quarter amounted to $1.18 billion, up from $1.16 billion in the year-ago period.

The 2 percent increase was slightly below company and Wall Street expectations, a factor the company attributed to lower seasonal sales.

Hershey has stuck to its strategy of extending popular brands like Reese's and Kisses, eliminating less profitable items and package sizes, and pushing aggressively into convenience and club stores.

During the quarter, Hershey's introduced the new S'mores candy bar and rolled out Swoops, which are chocolate pieces shaped like potato chips.

Lenny said in a statement that he expects continued strong performance in 2004 as Hershey steps up it efforts to introduce more new products, including a sugar-free York peppermint patty.

By the end of the fiscal first quarter, the company plans to roll out a "Hershey's 1 Gram Sugar Carb," a low-carbohydrate chocolate bar that will come in three flavors.

The introduction of this new bar comes during a massive low-carb diet craze sweeping across the United States.

Hershey's stock climbed 60 cents on the New York Stock Exchange by midday after closing at $75.35 a day earlier.