Food Business News - July 31, 2012 - 10

Investments help drive earnings gain at Hershey
organic net sales contribution from net price realization and volume to be more balanced.” For the six months ended July 1, the company had income of $334,336,000, or $1.52 per share, up 15% from $290,134,000, or $1.31 per share, during the same period of the previous year. Sales for the six months were $3,146,508,000, up 9% from $2,889,394,000. For the full-year 2012, the company expects diluted earnings per share to be in the range of $2.88 to $2.98. “We continue to expect input costs in 2012 will be higher than last year and there is no material change to our full-year inﬂation outlook,” Mr. Bilbrey said. “As previously mentioned, due to greater net price realization we now expect adjusted gross margin to increase 100 to 120 basis points. This is greater than our previous estimate of about a 90 to 100 basis point increase. As previously mentioned, S.M.&A. costs, including advertising, are on track. As a result, we expect full-year adjusted earnings per share-diluted growth of 12% to 14%. This is greater than our previous estimate of a 10% to 12% increase.” FBN

HERSHEY, PA. — With the candy, mint and gum category outpacing historical category growth, income for The Hershey Co. was up 4% during the second quarter. For the quarter ended July 1, the company had income of $135,685,000, equal to 62c per share on the common stock, which compared with income of $130,019,000, or 59c per share, in the same period a year ago. Sales for the quarter were $1,414,444,000, up 7% from $1,325,171,000. “The Hershey Co. reported another quarter of solid marketplace and ﬁnancial results,” said John P. Bilbrey, president and chief executive ofﬁcer. “The investments we have made in our

business over the last few years have enabled us to deliver predictable, profitable and sustainable growth despite the challenging global macroeconomic conditions that continue to exist. “In the second quarter, Hershey’s net sales increased 6.7%. Net price realization was a 6.6 point beneﬁt, slightly better than we expected, and volume, excluding the Brookside acquisition, was off 1.1 points due to volume elasticity associated with the pricing action taken last year. The Brookside acquisition was a 2.4 point beneﬁt in the quarter and foreign currency exchange rate a 1.2 point headwind. Over the remainder of the year, excluding the beneﬁt of the Brookside acquisition, we expect the

Prepared foods market to reach $32.45 billion in 2012
supermarkets have 60% market share of prepared food purchase visits. Wal-Mart Stores, Inc. had the next largest share at 15%, and convenience stores have a 12% share. “The market for store-made meals and prepared foods — which include rotisserie or fried chicken, hot pizza, hot food bars with Asian-style entrees, sushi bars, deli sandwiches and soup and salad bars — is doing well in this period of economic doldrums,” Packaged Facts said. “That’s partly because meal costs are not on par with fast food and family restaurant options, they beat them — making them accessible to a wide range of household incomes. Strong, high-quality store-brand portfolios are a signiﬁcant advantage for prepared foods retailers in keeping the price points of prepared foods down and part of the winning formula.” Speciﬁcally, the Nielsen Perishables Group said supermarket deli prepared foods generally come in at a price point between $4 and $5 for prepared chickens, salads, entrees and sandwiches with pizza, deli snacks, sides and soups priced between $3 and $4. In contrast, the average price of a sandwich at a quick-service restaurant is $7.52 and at a family restaurant it is $8.40, according to Datassential, a research ﬁrm that focuses on menu trends. Supermarkets also are receiving positive remarks from consumers on the healthfulness of their prepared items with Whole Foods Market having programs such as Health Starts Here, Wellness Clubs and Whole Kids Foundation. Packaged Facts forecasts 2012 convenience store prepared food sales at $17.4 billion, and the grocery store channel to reach $15.1 billion. Yet most prepared food consumers do not say that purchasing these food items is their primary motivation for visiting the store, as only 22% of convenience store prepared foods consumers said they were motivated by purchasing such foods and just 15% of supermarket consumers said purchasing prepared foods was their primary motivation for going to the store. FBN

COURTESY OF WHOLE FOODS MARKET

ROCKVILLE, MD. — Sales of prepared and ready-to-eat foods will reach $32.45 billion in 2012, up 8% from 2011, according to a report from Packaged Facts. Prepared foods at retail may be found in a growing number of store formats, but

FOODBUSINESS NEWS

July 31, 2012

Food Business News - July 31, 2012

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