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Mar 29, 2020
Hershey Q1 2020 Earnings Report
Net sales and earnings increased slightly, but operating profit decreased due to derivative losses and higher expenses. Full-year guidance was withdrawn due to COVID-19 uncertainty.
Key Takeaways
Hershey reported a slight increase in net sales for the first quarter of 2020, but experienced a decrease in net income and operating profit due to derivative mark-to-market losses and increased expenses. The company withdrew its full-year financial guidance due to the uncertainty surrounding the COVID-19 pandemic.
Consolidated net sales increased by 1.0% to $2,037.3 million.
Reported net income decreased by 11.0% to $271.1 million, or $1.29 per share-diluted.
Adjusted earnings per share-diluted increased by 2.5% to $1.63.
The company withdrew its fiscal 2020 full-year guidance due to the uncertainty of the COVID-19 pandemic.
Revenue by Segment
Revenue by Geographic Location
Forward Guidance
Due to the rapidly evolving situation and the high degree of uncertainty, the company does not believe that it can estimate the full financial impacts with reasonable accuracy, and therefore believes it is prudent to withdraw fiscal 2020 full-year guidance at this time. The company believes it has sufficient liquidity to satisfy its cash needs, as supported by access to bank lines of credit and an unsecured revolving credit facility. The company reaffirms its long-term financial objectives of net sales growth in the range of 2% to 4% and an increase in earnings per share of 6% to 8%.
Positive Outlook
- Company believes it has sufficient liquidity to satisfy its cash needs.
- Access to bank lines of credit.
- Access to an unsecured revolving credit facility.
- Reaffirms its long-term financial objectives of net sales growth in the range of 2% to 4%.
- Reaffirms an increase in earnings per share of 6% to 8%.
Challenges Ahead
- The length and severity of the pandemic and associated changes to consumer behaviors remain uncertain.
- Retail foot traffic and takeaway have been volatile.
Revenue & Expenses
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Historical Earnings Impact
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Avg. Return Before/After Earnings
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