Hershey Raises Outlook as Pricing Lifts Margins
Second-quarter net sales reached $2.787 billion, up 6.6% from a year earlier.
The Hershey Company (HSY), the confectionery and snack maker, raised its full-year outlook after pricing and lower commodity costs helped widen margins despite weaker demand.
Organic constant-currency sales growth slowed to 3.6% from 7.9% in the first quarter. Companywide pricing contributed about 12 percentage points, up from 10 points, while volume and mix deteriorated to an 8-point decline from a 2-point decline.
Adjusted diluted earnings rose 57% to $1.90 a share, accelerating from 12.4% growth in the first quarter and reversing a fourth-quarter decline. Reported diluted earnings climbed to $2.26 a share from 31 cents, while net income increased 629% to $457.7 million, aided by $102.9 million of derivative mark-to-market gains compared with $200.7 million of losses a year earlier.
Adjusted gross margin expanded 350 basis points to 41.6%, and adjusted operating margin widened 450 basis points to 20.2%. Pricing, lower net commodity costs and productivity savings outweighed logistics expenses, unfavorable mix and technology investments.
North America Confectionery organic sales growth slowed to 4.2% as stronger pricing was offset by a roughly 10% volume decline. Segment income rose 40.1% to $705.8 million, lifting the margin 830 basis points to 32.5%, even as the company lost U.S. candy, mint and gum market share amid increased competitive innovation.
North America Salty Snacks sales rose 22.9%, with roughly 22 percentage points coming from the LesserEvil acquisition, while organic growth fell to 0.6%. Segment income declined 5.9% to $62.6 million as logistics costs, trade spending and unfavorable mix compressed the margin by 500 basis points. International organic growth slowed to 2.1%, and the business swung to a $5.1 million segment loss as raw-material, manufacturing and advertising costs outweighed pricing and productivity benefits.
Hershey now expects 2026 net-sales growth of 4.5% to 5% and organic growth of 3% to 3.5%, raising the low end of each range. Adjusted diluted earnings are projected at $8.36 to $8.52 a share, up from $8.20 to $8.52, while expected acquisition and integration adjustments increased to 18 cents to 25 cents a share.