(Reuters) - Hershey Co on Thursday reported quarterly profit and sales that narrowly missed Wall Street estimates, hurt by lower prices, overshadowing a profit forecast for the full year that was largely above analysts’ estimates.
Hershey has been going beyond chocolates and candies to build a portfolio of snack brands through acquisitions in line with growing consumer preference for healthy food over sugary candies and processed food.
The maker of Kisses chocolate is also revamping its chocolates and candies portfolio to overcome competition in North America.
The Pennsylvania-based company had bought cheese puff maker Pirate Brands for $420 million in September 2018, adding to its portfolio of snacks brands that includes SkinnyPop popcorn maker Amplify Snack Brands, beef jerky maker Krave and barkTHINS.
Hershey forecast full-year adjusted profit to be in the range of $5.63 per share to $5.74 per share, the mid-point of which at $5.69 is above analysts’ estimate of $5.65 per share, according to IBES data from Refinitiv.
Hershey also forecast full-year sales growth to be in the range of 1 percent to 3 percent in line with expectations.
“Our recently acquired snacking brands continue to generate strong growth and delivered against our financial objectives,” Chief Executive Officer Michele Buck said in a statement.
Launch of new products such as Reese’s Thins this year, an average 2.5 percent price hike and redesigned candy packaging are expected to benefit the company in 2019.
“The company’s initial 2019 guidance would represent a solid performance..., but we believe this is a show-me story given the outlook requires a significant improvement in underlying sales growth from the rates achieved in 2018 and even Q4 18,” Stifel analyst Christopher Growe wrote in a research note.
Hershey’s net sales rose 2.5 percent to $1.99 billion in the quarter ended Dec. 31, but narrowly missed the average analyst estimate of $2 billion, weighed down by a 0.8 percent cut in average price aimed at boosting volumes.
Net income attributable to the company surged to $336.8 million, or $1.60 per share, in the quarter, from $181.1 million, or 85 cents per share, a year earlier.
Excluding items, Hershey earned $1.26 per share, missing analysts’ estimate by one cent.
Shares of the company, which were down as much as 4.5 percent in early trading, pared losses to trade 2 percent lower at $103.78.
Reporting by Soundarya J in Bengaluru; Editing by James Emmanuel