Hershey Sales Hurt by Slowdown in China

Hershey Co. on Thursday said its fourth-quarter revenue fell 5%, hurt by a sharp drop in chocolate sales in China, though earnings came in above market expectations.

The maker of Reese's and its namesake candy bar among others said constant-currency sales of chocolate in China fell 34% in the fourth quarter from a year prior. Overall international sales fell 27% to $281.5 million, denting the company's top line. North America sales, meanwhile, edged up 0.2% to $1.63 billion.

In mid-December, the company announced that Rob Gehring, formerly of Coca-Cola Co., would join the company as its new global chief sales officer.

Hershey said it expects 2016 constant currency net sales growth to be about 3% with foreign currency exchange rates hurting revenue by 1%. The company expects adjusted earnings per share to increase by about 6%. Analysts polled by Thomson Reuters had most recently estimated 2% revenue growth and 6% growth in adjusted earnings per share.

Overall, Hershey reported a quarterly profit of $213.4 million, or 98 cents a share, up from $202.5 million, or 91 cents a share, a year earlier. Excluding one-time items, earnings rose to $1.08 a share from $1.04. Revenue fell 5% to $1.91 billion.

Analysts polled by Thomson Reuters had forecast earnings of $1.05 a share on $1.98 billion in revenue.

During the fourth-quarter holiday season, the company rolled out chocolate products made with simple ingredients and no artificial flavors, a commitment announced last year. The change comes amid a market shift to more natural, locally sourced products, which consumers largely regard as healthier.

Hershey shares, which have fallen 4.3% in the last three months, were inactive in premarket trading.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

January 28, 2016 09:25 ET (14:25 GMT)

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