Upcoming AWS Coverage on Mondel?z International Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 15, 2017 / Active Wall St. announces its post-earnings coverage on The Hershey Co. (NYSE: HSY). The Company disclosed its financial results for the fourth quarter and full year fiscal 2016 on February 03 2017. Hershey, one of the largest chocolate manufacturers in North America, surpassed earnings expectations. Register with us now for your free membership at:

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One of Hershey's competitors within the Confectioners space, Mondel?z International, Inc. (NASDAQ: MDLZ), reported its Q4 and full-year 2016 results on February 07, 2017. AWS will be initiating a research report on Mondel?z International in the coming days.

Today, AWS is promoting its earnings coverage on HSY; touching on MDLZ. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended December 31, 2016, Hershey reported that consolidated net sales were $1.97 billion, up 3.2% compared to $1.91 billion for Q4 2015, slightly below analysts' forecasts of $1.99 billion. Excluding the effect of foreign currency translation, a 0.5 point headwind, net sales increased 3.7% on a y-o-y basis. Volume was a 3.4 point contribution, while net price realization was off 0.6 points. The barkTHINS brand acquisition was a 0.9 point benefit in Q4 216. For the full year ended December 31, 2016, consolidated net sales were $7.44 billion compared to $7.39 billion for FY15, representing an increase of 0.7%.

For Q4 2016, Hershey's adjusted gross margin was 44.5% compared to 45.0% in Q4 2015. The 50 basis point decline was primarily driven by unfavorable supply chain costs and trade, which was partially offset by supply chain productivity and costs savings initiatives. The Company's reported operating profit was $229.5 million in Q4 2016, resulting in operating profit margin of 11.6%.

For Q4 2016, Hershey's reported net income was $116.9 million, or $0.55 per share-diluted, compared to $227.9 million, or $1.04 per share-diluted, for the comparable period of 2015. The Company stated that the reported numbers for Q4 2016 included items impacting comparability of $148.9 million, or $0.62 per share-diluted share. For Q4 2015, items impacting comparability totaled $15.5 million, or $0.04 per share-diluted. Excluding these items, Hershey's adjusted net income for the reported quarter totaled $249.7 million, or $1.17 per share-diluted, compared to $237.0 million, or $1.08 per share-diluted, for Q4 2015, an increase of 8.3% in adjusted earnings per share-diluted. Results also beat analysts' consensus estimates of $1.08 per share. For FY16, Hershey's adjusted net income, was $948.5 million, or $4.41 per share-diluted, compared to $909.7 million, or $4.12 per share-diluted, for FY15, an increase of 7% in adjusted earnings per share-diluted.

Segment Results

For Q4 2016, Hershey's North America net sales were $1.69 billion, an increase of 3.8% versus the same period last year. Volume was a 4.1 point contribution to sales growth and, net price realization was a 1.3 point headwind. The barkTHINS brand acquisition was a 1.0 point benefit in for the segment in Q4 2016.

For Q4 2016 and FY16, Total Hershey US retail takeaway, in the expanded all outlet combined plus convenience store channels (xAOC+C-store) increased 2.2% and 1.0%, respectively. For FY16, total Hershey US market share increased 0.1 points.

North America segment's income increased 1.8% to $521.9 million in Q4 2016 compared to $512.9 million in Q4 2015. The increase in segment income was driven by an increase in gross profit of about 2.2%, which was partially offset by higher advertising, marketing and selling expense.

International and Other

Q4 2016 net sales for Hershey's International and Other segment declined 0.5% to $280.1 million. Net price realization was a 2.8 point benefit and volume was about the same as the year ago same period. Excluding the 3.2 point impact of unfavourable foreign exchange rates net sales increased 2.7%. The Company recorded solid constant currency net sales growth in Mexico, Brazil and India. China net sales were slightly below its forecast due to challenges in modern trade that persist given the current macroeconomic environment. In the reported quarter, China chocolate category retail sales declined about 4%. For the reported quarter, International and Other segment loss of $16.7 million compared to a segment loss of $18.3 million in the year earlier corresponding quarter.

Balance Sheet & Cash Flow

During Q4 2016, Hershey's net trading capital declined by $71 million. Accounts receivable was lower by $17.7 million. Inventory was lower by $5.3 million and accounts payable increased by $48.3 million. Total capital additions, including software, for the fourth quarter and full year were $101 million and $269.5 million.

On the same day in a separate press release, Hershey's Board of Directors announced quarterly dividends of $0.618 on the Common Stock and $0.562 on the Class B Common Stock. The dividends are payable March 15, 2017, to stockholders of record February 24, 2017. It is the 349th consecutive regular dividend on the Common Stock and the 130th consecutive regular dividend on the Class B Common Stock.

Outlook

For FY17, Hershey estimates net sales growth of 2% to 3%, including a net benefit from acquisitions of about 0.5 points and unfavorable foreign currency exchange rates of about 0.25 points. For FY17, the Company anticipates adjusted earnings per share-diluted to increase 7% to 9% and be in the $4.72 to $4.81 range.

Stock Performance

On February 14, 2017, Hershey's share price finished the trading session at $108.34, marginally up 0.12%. A total volume of 686.51 thousand shares exchanged hands. The stock has advanced 11.40% and 22.08% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 4.75%. The stock is trading at a PE ratio of 41.61 and has a dividend yield of 2.28%.

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SOURCE: Active Wall Street