Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide context on the potential for balanced growth in 2026, especially considering current cocoa prices? A: Steve Voskuil, CFO, explained that the company aims for balanced growth by leveraging pricing, productivity savings, and efficiency improvements. Despite high cocoa prices, Hershey is not paying market rates due to effective hedging. Pricing will be challenging, but 80% of the portfolio is priced under $4, which offers some flexibility.
Q: How is Hershey managing elasticity with recent price increases, and what are the strategic considerations? A: Michele Buck, CEO, noted that elasticities are meeting or exceeding expectations. The company is confident in its pricing strategy, carefully selecting where to implement increases while considering cocoa price normalization.
Q: What factors are influencing your decision to adjust pricing or formulations in response to commodity market changes? A: Michele Buck highlighted that Hershey considers both market fundamentals and actual price movements. The company is diversifying supply sources and monitoring cocoa market dynamics to inform pricing and formulation decisions.
Q: How are you addressing competitive pressures in international markets, particularly in Brazil and Mexico? A: Steve Voskuil mentioned that while Q4 was strong, competitive activity, especially in Brazil and Mexico, is expected to increase. Hershey plans to manage this through innovation and strategic market positioning.
Q: What is the outlook for gross margin pressure throughout the year, and how are hedges impacting this? A: Steve Voskuil stated that Hershey is nearly fully covered on cocoa for the year, with less margin pressure expected in the first half. The impact will be more pronounced in the second half as higher-priced hedges take effect.
Q: How is Hershey planning to innovate within the non-chocolate segment, and what are the advertising strategies? A: Michele Buck discussed recent innovations like SHAQ-A-LICIOUS Gummies and Jolly Rancher products, which will benefit from carryover effects and new launches. Advertising efforts will support these innovations to drive growth.
Q: What are the key factors driving chocolate volume declines, and how is Hershey addressing them? A: Michele Buck identified several factors, including the growth of the sweets segment, channel shifts, and health and wellness trends. Hershey is focusing on innovation and expanding its zero sugar and protein product lines to address these challenges.
Q: How is Hershey approaching the potential impact of GLP-1 drugs on consumer behavior? A: Michele Buck stated that there is no material impact from GLP-1 drugs on Hershey's categories. The company is monitoring consumer preferences for healthier options and evolving its portfolio accordingly.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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