Hershey’s reports 66% loss

Source: Exec Digital USA

Date :10/18/2007 9:49:21 AM

Hershey’s Co posted a 66 percent drop in quarterly profit on Thursday on higher costs, restructuring charges, and falling sales.

The largest U.S. chocolate saw profit of $62.8 million, or 27 cents a share, in the third quarter, compared with $185.1 million, or 78 cents, a year earlier – including a pretax charge of 41 cents a share for restructuring.

Hershey’s is cutting the number of its production lines by more than one-third, outsourcing the manufacturing of less profitable items and building a factory in Mexico to meet emerging market demands.

Chief Executive Richard Lenny said the restructuring effort "remains on track and is scheduled to deliver savings of about $15 million by the end of the year with a significant step-up in 2008."

Lower forecast

Hershey's market share fell in the quarter as Mars, the maker of M&Ms, won sales.

Third-quarter sales were lower than the $1.44 billion forecast by analysts falling one percent to $1.4 billion from almost $1.42 billion a year ago hurt also by tighter credit conditions and slower-than-anticipated improvement in convenience store sales.

Hershey’s shares were down four percent in premarket trading as operating earnings fell below analysts' estimates.

Excluding one-time charges, earnings were 68 cents a share, and the company said 2008 would be a challenging year.

October 18 2007

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