Hershey Posts Downbeat Q1 Results, Lowers Sales Forecast

reported weaker-than-expected results for the first quarter and lowered its sales growth forecast for 2015. For the year, Hershey projects sales growth of 4.5 percent to 5.5 percent, versus its earlier outlook for 5.5 percent to 7.5 percent growth. The Hershey, Pennsylvania-based company posted a quarterly profit of $244.7 million, or $1.10 per share, versus a year-ago profit of $252.5 million, or $1.11 per share. Excluding special items, the company earned $1.09 per share. Its sales rose 3.5 percent to $1.94 billion. However, analysts were projecting a profit of $1.16 per share on revenue of $1.96 billion Hershey's North America net sales climbed 2.9 percent year-over-year to $1,707.0 million in the first quarter, while sales for Hershey's International and Other segment rose 8.5 percent to $230.8 million. Total costs climbed 5 percent to $1.54 billion in the quarter. Advertising and related consumer marketing expense rose around 8 percent. Adjusted gross margin widened to 46.6 percent in the first quarter, versus 46.5 percent in the year-ago quarter. The average estimate among 10 Estimize users was for earnings of $1.16 per share and revenue of $1.96 billion. "In the first quarter we made progress against the initiatives we outlined in January, particularly in our U.S. business where net sales and operating income were slightly ahead of expectations and market share increased 0.2 points," said John P. Bilbrey, Chairman, President and Chief Executive Officer, The Hershey Company. "Net sales increased 4.6% in the first quarter, excluding unfavorable foreign currency translation of about 1.1 points, which was about 0.5 points greater than our estimates. However, consolidated results were less than our expectations, primarily due to softness within the China modern trade where many consumer packaged goods categories declined. We believe this weakness is partially due to a decline in consumer confidence related to mixed macroeconomic data." Hershey shares fell 3.10 percent to $95.29 at 11:20 a.m. ET.