Hershey’s Q4 2024 Earnings: Strong Sales Amid Commodity Pressures
- Hardik Shah
- Feb 6
- 2 min read
Updated: Feb 11
TLDR
Revenue Growth: Q4 2024 net sales increased 8.7% year-over-year to $2.89 billion, driven by pricing and volume gains.
Profitability Challenges: Higher cocoa prices are expected to put significant pressure on 2025 earnings.
Strategic Initiatives: Hershey continues to focus on innovation, supply chain efficiencies, and category expansion.
Financial Results
The Hershey Company (NYSE: HSY) is a leading confectionery manufacturer known for its chocolate and snack brands, including Hershey’s, Reese’s, and Kit Kat. The company operates in three segments: North America Confectionery, North America Salty Snacks, and International. It continues to expand its portfolio through acquisitions, such as the recent purchase of Sour Strips.
Q4 2024 Highlights:
Net Sales: $2.89 billion (+8.7% YoY)
Organic, Constant Currency Net Sales: +9.0%
Net Income: $796.6 million (+130.6%)
Adjusted EPS: $2.69 (+33.2%)
Operating Profit: $939.1 million (+102.3%)
Gross Margin: 54.0% (up 1170 basis points, primarily due to commodity hedging gains)
Full-Year 2024 Highlights
Net Sales: $11.2 billion (+0.3%)
Net Income: $2.22 billion (+20.5%)
Adjusted EPS: $9.37 (-2.3%)
Operational Performance
Successes
Strong Salty Snacks Growth: Net sales increased 35.9% in Q4, with Dot’s Pretzels and SkinnyPop contributing to volume gains.
Sweets Innovation: Products like Shackalicious Gummies and Sour Strips boosted non-chocolate confectionery sales.
Inventory & Productivity Gains: A new ERP system improved cost allocations, providing an unexpected Q4 tailwind.
Challenges
Commodity Pressures: Cocoa prices remain at elevated levels, impacting gross margins.
Elasticity Concerns: Pricing strategies are carefully monitored to balance volume and profitability.
International Headwinds: Competitive pressures in Brazil and Mexico weigh on global growth prospects.
Market Insights
Cocoa Market Uncertainty: Hershey has hedged its 2025 cocoa costs, but pricing for 2026 remains a challenge.
Retailer Demand & Consumer Behavior: While confectionery demand remains stable, pricing sensitivity and value-seeking behavior are increasing.
Health & Wellness Trends: Hershey is expanding zero-sugar and high-protein offerings in response to changing consumer preferences.
Strategic Initiatives
Portfolio Expansion: Hershey is increasing focus on non-chocolate categories to drive incremental growth.
Innovation Pipeline: New Reese’s innovation set to launch in 2025, expected to be the brand’s biggest in years.
Cost-Saving Programs: The Agility & Automation Initiative aims to save $125 million in 2025.
M&A Activity: Hershey continues to integrate Sour Strips and optimize the Weaver Popcorn acquisition.
Forward Guidance
2025 Performance: Hershey anticipates ~2% revenue growth but a significant EPS decline (mid-30%) due to commodity costs.
2026 Recovery Plan: The company aims to return to balanced top- and bottom-line growth, with potential upside if cocoa prices stabilize.
The Bottom Line
Hershey closed 2024 with strong sales momentum, but high cocoa costs are a significant concern for 2025 earnings. The company remains focused on portfolio diversification, cost efficiencies, and disciplined pricing strategies to navigate market challenges. Investors should closely monitor commodity trends, pricing elasticity, and international competition in the coming quarters.
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