Food Business News - February 9, 2016 - (Page 21)

Global challenges weigh on Hershey's earnings HERSHEY, PA. - A challenging global economic environment affected The Hershey Co. in fiscal 2015. China was the primary source of concern, but Brazil and Mexico also contributed to lower earnings and sales for the year. "Similar to what we've discussed over the last year, (China's) category performance is being impacted by macroeconomic issues and the related impact it's having on consumer shopping behavior and confidence," said J.P. Bilbrey, chairman, president and chief executive officer, during a Jan. 28 conference call with financial analysts. "And given the China news flow that we've all seen, it continues to be difficult to gauge the consumer's behavior. We're focused on the integration of our businesses and building distribution on our portfolio." For the year ended Dec. 31, 2015, The Hershey Co.'s net income was $512,951,000, equal to $2.40 per share on the common stock, and a decline compared with fiscal 2014 when earnings were $846,912,000, or $3.91 per share. Sales for the year fell slightly to $7,386,626,000 from $7,421,768,000 during fiscal 2014. "We believe the macroeconomic environment and competitive activity in the international markets where we operate will continue to be a headwind for the chocolate category and Hershey in 2016," Mr. Bilbrey said. "Therefore, we estimate constant-currency International and Other segment net sales growth of mid- to high-single digits in 2016. Over the long term, we expect global economies and category trends to improve and that our International business on a constant-currency basis will contribute about 1 point to our overall long-term sales target." In North America, the situation was somewhat better, but the expanding snack category combined with greater competition in confectionery did pose a challenge for the company. "As we've previously discussed, the category is being impacted by many of the same February 9, 2016 issues facing other food categories, including: changing shopping habits, like channel shifting; increased competitive activity and some retailers adjusting their merchandising practices; and a proliferation of broader snack s.k.u.s (stock-keeping units)," Mr. Bilbrey said. "As a result, going forward, we estimate that C.M.G. (candy, mint and gum) category growth will be in the 2.5% to 3% range. Our goal is to outpace the category and gain share on an annual basis. Additionally, we have good visibility into our developing snacks portfolio and expect positive sales contributions from it in 2016." Innovation the company has planned to address some of the challenges include the Global net sales of The Hershey Co. in millions $7,390 $7,420 2015 2014 $7,150 $6,640 2013 2012 2011 2010 2009 2008 $6,080 $5,670 $5,300 $5,130 2007 $4,950 2006 $4,940 Source: The Hershey Co. introduction of Brookside bars, snack mix and snack bites and the increased distribution of Krave meat snacks. "We'll also launch Cadbury Chocolates in a stand-up pouch, targeting the mass premium market, and begin a 500-store test featuring Scharffen Berger and Dagoba Organic brands," Mr. Bilbrey said. "And, we'll introduce Allan Candy sugar confectionery items in peg bags to appeal to a cost-conscious consumer. This is just a brief summary of some of the activity we have in North America this year." During the fourth quarter, Hershey's net income rose to $213,384,000, or $1.01 per share, and an increase compared with the same period of the previous year when earnings totaled $202,508,000, or 94c per share. Sales for the quarter fell to $1,909,222,000 compared with $2,010,027,000 during the previous year. FBN ingredients custom blends innovation national distribution B.C. Williams Bakery Service BCW Food Products 1-800-527-4104 FOODBUSINESS NEWS ® 21

Table of Contents for the Digital Edition of Food Business News - February 9, 2016

Food Business News - February 9, 2016
Mondelez expects snack sales to slow
Starbucks ‘firing on all cylinders’ in C.P.G.
Beverage Business News - Boosting the nutrition profile of beverages
Table of Contents
Web Contents
Editorial - Trust and the rising bar for ‘achieving’ food safety
Survey finds natural labels may mislead consumers
‘The U.S. consumer has changed’
Take the lead in transparency
ChemChina to acquire Syngenta for $43 billion
A new venture for PepsiCo
Chipotle focusing on recovery, food safety
Coca-Cola takes stake in Nigerian business
SuperValu picks new president, c.e.o.
Madagascar 2 - Vanilla prices soar again
Nestle in talks to acquire Israel’s largest food company
Global challenges weigh on Hershey’s earnings
Court sides with Dannon, General Mills in yogurt case
Market Insight - Beef is bouncing back
Ingredient Trends - Plant protein applications evolving
Ingredient Innovations - Three considerations when choosing emulsifiers
Emulsion innovation extends beverage stability
New Food Products
Ingredient Market Trends - Ethanol fuels fireworks in the Iowa Republican caucus
Ingredient Markets
Supplier Innovations and News
Ad Index

Food Business News - February 9, 2016