HERSHEY, Pa. --The Hershey Co. has announced an increase in wholesale prices across its United States, Puerto Rico and export chocolate and sugar confectionery lines. A weighted average 11% increase on the company's instant consumable, multi-pack and packaged candy lines went into effect on Friday.
These changes approximate a 10% increase over Hershey's entire domestic product line and will help offset a portion of the significant increases in the company's input costs, including raw materials, packaging materials, fuel, utilities and transportation, it said.
"Commodity costs have [image-nocss] been volatile over the last several years and continue to remain at levels that are well above historical averages," said David J. West, president and CEO of Hershey. "Market prices for ingredients such as cocoa, corn sweeteners, sugar and peanuts are up 20% to 45% since the beginning of the year. As such, in 2009 we expect our commodity cost increase to be more than double the 2008 increase. Execution of commodity hedging strategies to firm up our 2009 commodity cost profile will add approximately $10 million to $12 million, or roughly 3 cents per share, to our initial estimate of about a $100 million increase in 2008 raw material costs. This additional increase, as well as the timing and slightly higher trade promotion expense related to the price increase, will be reflected in our third-quarter results."
He added, "We remain committed to the higher levels of brand support, consumer investment, retail coverage and merchandising in both 2008 and 2009 that we previously communicated. We anticipate 2008 earnings per share-diluted from operations within the $1.85 to $1.90 range we previously projected. Given current economic and market conditions, it appears that full-year 2008 earnings per share-diluted will be toward the lower end of this range. For the full-year 2008, we continue to expect net sales growth of 3% to 4%. Consumers are likely to see higher everyday and promotional retail prices as we implement the price increase and, as a result, we expect volume in the fourth quarter and next year to be lower than previously estimated."
West said, "In 2009, we expect net sales growth of 2% to 3% versus our previous projection of 3% to 5%. We will focus on productivity and other initiatives to offset a portion of the higher input costs and increased consumer investment; therefore, we continue to expect that earnings per share-diluted from operations in 2009 will increase, however, at a rate below our long-term objective of 6% to 8% growth."
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