Hershey Reports Second-Quarter 2025 Financial Results
Rhea-AI Summary
Hershey (NYSE:HSY) reported Q2 2025 financial results with consolidated net sales of $2.61 billion, up 26.0% year-over-year. The company's reported net income was $62.7 million, or $0.31 per share-diluted, representing a 65.2% decrease. Adjusted earnings per share were $1.21, down 4.7%.
The company updated its 2025 outlook, now expecting net sales growth of at least 2% but projecting reported earnings per share to decline ~50% and adjusted earnings per share to decrease 36-38%. Key factors include anticipated tariff expenses of $170-180 million and implementation of commodity cost mitigation strategies.
Performance across segments showed North America Confectionery sales up 32.0%, North America Salty Snacks up 8.8%, and International sales increasing 4.4%. The company's gross margin declined to 30.5% from 40.2% in Q2 2024, primarily due to higher commodity and manufacturing costs.
Positive
- Net sales increased significantly by 26.0% to $2.61 billion
- North America Confectionery segment sales grew 32.0%
- U.S. candy, mint and gum retail takeaway grew 21.8% with 90 basis points market share gain
- Increased Agility & Automation Initiative savings target to $150 million from $125 million
- North America Salty Snacks segment income increased 27.4% with 310 basis points margin improvement
Negative
- Reported net income decreased 65.2% to $62.7 million
- Adjusted earnings per share declined 4.7% to $1.21
- Gross margin declined 970 basis points to 30.5%
- Expected tariff expenses of $170-180 million for full year
- Updated guidance projects reported earnings per share to decline ~50% for 2025
- International segment profit decreased by $5.2 million with 290 basis points margin decline
Insights
Hershey's Q2 shows mixed results with strong sales growth but declining margins amid cocoa inflation and tariff headwinds.
Hershey delivered 26.0% consolidated net sales growth to
Despite the sales jump, reported net income plummeted
The margin compression stems primarily from severe cocoa inflation and higher manufacturing costs that pricing actions couldn't fully offset. Additional headwinds include approximately
Hershey lowered its full-year guidance, now expecting adjusted EPS to decline
By segment, North America Confectionery sales grew
While Hershey's brands continue to gain market share (U.S. candy/mint/gum share up
"We are pleased with our second-quarter results and the momentum we are seeing in our business," said Michele Buck, The Hershey Company President and Chief Executive Officer. "Investments in our brands and impactful innovation, coupled with effective execution, are driving solid sales and share gains across both our
Second-Quarter 2025 Financial Results Summary1
- Consolidated net sales of
$2,614.7 million 26.0% . - Organic, constant currency net sales increased
26.3% . - Both consolidated and organic, constant currency net sales reflected the lap of planned inventory reductions within North America Confectionery and International related to the second quarter 2024 ERP system implementation and a later Easter in 2025. First half net sales increased
1.7% , offsetting these impacts. - Reported net income of
$62.7 million $0.31 65.2% . - Adjusted earnings per share-diluted of
$1.21 4.7% .
1 All comparisons for the second quarter of 2025 are with respect to the second quarter ended June 30, 2024 | ||||||||||||
2025 Full-Year Financial Outlook
The Company is updating its reported and adjusted earnings per share outlook to reflect, as understood today, estimated tariff expenses for the full year, expanding the impact beyond the second quarter. Additionally, the outlook incorporates recently announced commodity cost mitigation strategies. This guidance does not include the effects of our proposed acquisition of LesserEvil.
2025 Full-Year Outlook | Prior Guidance | Current Guidance | ||
Net sales growth* | Up at least | Up at least | ||
Reported earnings per share growth | Down high | Down ~ | ||
Adjusted earnings per share growth | Down mid | Down |
* The impact of the Sour Strips acquisition is anticipated to be an approximate 40 basis point benefit to net sales growth for the full-year 2025. Additionally, the impact of foreign currency exchange rates is anticipated to be an approximate 50 basis point headwind to net sales growth for the full-year 2025. |
The Company also expects:
- Tariff expense, as understood today, to be approximately
$170 $180 million - A reported effective tax rate of approximately
27% and adjusted effective tax rate of approximately24% , reflecting the changing global business and tax landscape; - Other expense, which primarily reflects the write-down of equity investments that qualify for a tax credit, of approximately
$75 million $80 million - Interest expense of approximately
$200 million - Capital expenditures of approximately
$425 million $450 million - Advancing Agility & Automation Initiative savings of approximately
$150 million $125 million
Below is a reconciliation of current projected 2025 and full-year 2024 earnings per share-diluted calculated in accordance with
2025 (Projected) | 2024 | ||
Reported EPS – Diluted | |||
Derivative Mark-to-Market Losses | — | (2.26) | |
Business Realignment Activities | 0.40 - 0.50 | 0.58 | |
Acquisition and Integration-Related Activities | 0.03 - 0.07 | 0.22 | |
Other Miscellaneous (Benefits) Losses | — | (0.03) | |
Tax Effect of All Adjustments Reflected Above | (0.12) | (0.06) | |
Adjusted EPS – Diluted |
Adjusted 2025 projected earnings per share-diluted, as presented above, does not include the impact of mark-to-market gains and losses on our commodity derivative contracts that are reflected within corporate unallocated expense in segment results until the related inventory is sold since we are not able to forecast the impact of the market changes.
Second-Quarter 2025 Components of Net Sales Growth
A reconciliation between reported net sales growth rates and organic, constant currency net sales growth rates, along with the contribution from net price realization and volume, is provided below:
Three Months Ended June 29, 2025 | |||||||||||||
Percentage | Impact of | Percentage | Impact of | Percentage | Organic (Rounded)* | Organic (Rounded)* | |||||||
North America Confectionery | 32.0 % | (0.2) % | 32.2 % | 0.6 % | 31.6 % | 6 % | 25 % | ||||||
| |||||||||||||
North America Salty Snacks | 8.8 % | — % | 8.8 % | — % | 8.8 % | 5 % | 4 % | ||||||
| |||||||||||||
International | 4.4 % | (5.6) % | 10.0 % | — % | 10.0 % | 1 % | 9 % | ||||||
| |||||||||||||
Total Company | 26.0 % | (0.7) % | 26.7 % | 0.4 % | 26.3 % | 5 % | 21 % | ||||||
|
*Percentage changes may not compute directly as shown due to rounding of amounts presented above. |
The Company presents certain percentage changes in net sales on a constant currency basis, which excludes the impact of foreign currency exchange. To present this information for historical periods, current period net sales for entities reporting in currencies other than the
Second-Quarter 2025 Consolidated Results
Consolidated net sales increased
Reported gross margin was
Selling, marketing and administrative expenses increased
Second quarter 2025 reported operating profit was
The reported effective tax rate in the second quarter of 2025 was
The Company's second quarter 2025 results, as prepared in accordance with GAAP, included items positively impacting comparability of
The following table presents a summary of items impacting comparability in each period (see Appendix I for additional information):
Pre-Tax (millions) | Earnings Per Share-Diluted | ||||||
Three Months Ended | Three Months Ended | ||||||
June 29, 2025 | June 30, 2024 | June 29, 2025 | June 30, 2024 | ||||
| |||||||
Derivative Mark-to-Market Losses (Gains) | $ 200.7 | $ 53.4 | $ 0.98 | $ 0.26 | |||
Business Realignment Activities | 15.1 | 39.0 | 0.07 | 0.19 | |||
Acquisition and Integration-Related Activities | 1.9 | 3.3 | 0.01 | 0.02 | |||
Tax Effect of All Adjustments Reflected Above | — | — | (0.16) | (0.09) | |||
$ 217.7 | $ 95.7 | $ 0.90 | $ 0.38 | ||||
The following are comments about segment performance for the second quarter of 2025 versus the prior year period. See the schedule of supplementary information within this press release for additional information on segment net sales and profit.
North America Confectionery
The North America Confectionery segment reported segment income of
2 MULO+ w/Convenience expanded in the second quarter of 2024 to include club, drug, and e-commerce customers previously classified as unmeasured | ||||||||||||
North America Salty Snacks
North America Salty Snacks segment income was
3 MULO+ w/Convenience expanded in the second quarter of 2024 to include club, drug, and e-commerce customers previously classified as unmeasured | |||||||||||
International
Second quarter 2025 net sales for
The International segment reported a
Unallocated Corporate Expense
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At approximately 6:45 a.m. (Eastern time) today,
Note: In this release, for the second quarter of 2025,
Reconciliation of Certain Non-GAAP Financial Measures | |||
Consolidated results | Three Months Ended | ||
In thousands except per share data | June 29, 2025 | June 30, 2024 | |
Reported gross profit | $ 796,273 | $ 833,745 | |
Derivative mark-to-market losses | 200,727 | 53,371 | |
Business realignment activities | — | 8,099 | |
Non-GAAP gross profit | $ 997,000 | $ 895,215 | |
| |||
Reported operating profit | $ 192,811 | $ 287,821 | |
Derivative mark-to-market losses | 200,727 | 53,371 | |
Business realignment activities | 15,139 | 39,000 | |
Acquisition and integration-related activities | 1,880 | 3,286 | |
Non-GAAP operating profit | $ 410,557 | $ 383,478 | |
| |||
Reported provision for income taxes | $ 86,393 | $ 64,980 | |
Derivative mark-to-market losses* | 29,754 | 8,216 | |
Business realignment activities* | 3,808 | 9,415 | |
Acquisition and integration-related activities* | 448 | 790 | |
Non-GAAP provision for income taxes | $ 120,403 | $ 83,401 | |
| |||
Reported net income | $ 62,719 | $ 180,894 | |
Derivative mark-to-market losses | 170,974 | 45,155 | |
Business realignment activities | 11,330 | 29,585 | |
Acquisition and integration-related activities | 1,432 | 2,496 | |
Non-GAAP net income | $ 246,455 | $ 258,130 | |
| |||
Reported EPS - Diluted | $ 0.31 | $ 0.89 | |
Derivative mark-to-market losses | 0.98 | 0.26 | |
Business realignment activities | 0.07 | 0.19 | |
Acquisition and integration-related activities | 0.01 | 0.02 | |
Tax effect of all adjustments reflected above** | (0.16) | (0.09) | |
Non-GAAP EPS - Diluted | $ 1.21 | $ 1.27 | |
* The tax effect for each adjustment is determined by calculating the tax impact of the adjustment on the Company's quarterly effective tax rate, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment. |
** Adjustments reported above are reported on a pre-tax basis before the tax effect described in the reconciliation above for non-GAAP provision for income taxes. |
In the assessment of our results, we review and discuss the following financial metrics that are derived from the reported and non-GAAP financial measures presented above:
Three Months Ended | |||
June 29, 2025 | June 30, 2024 | ||
As reported gross margin | 30.5 % | 40.2 % | |
Non-GAAP gross margin (1) | 38.1 % | 43.2 % | |
| |||
As reported operating profit margin | 7.4 % | 13.9 % | |
Non-GAAP operating profit margin (2) | 15.7 % | 18.5 % | |
| |||
As reported effective tax rate | 57.9 % | 26.4 % | |
Non-GAAP effective tax rate (3) | 32.8 % | 24.4 % | |
(1) | Calculated as non-GAAP gross profit as a percentage of net sales for each period presented. |
(2) | Calculated as non-GAAP operating profit as a percentage of net sales for each period presented. |
(3) | Calculated as non-GAAP provision for income taxes as a percentage of non-GAAP income before taxes (calculated as non-GAAP operating profit minus non-GAAP interest expense, net plus or minus non-GAAP other (income) expense, net). |
Appendix I
Details of the charges included in GAAP results, as summarized in the press release (above), are as follows:
Derivative mark-to-market (gains) losses: The mark-to-market (gains) losses on commodity derivatives are recorded as unallocated and excluded from adjusted results until such time as the related inventory is sold, at which time the corresponding (gains) losses are reclassified from unallocated to segment income. Since we often purchase commodity contracts to price inventory requirements in future years, we make this adjustment to facilitate the year-over-year comparison of cost of sales on a basis that matches the derivative gains and losses with the underlying economic exposure being hedged for the period.
Business realignment activities: We periodically undertake restructuring and cost reduction activities as part of ongoing efforts to enhance long-term profitability. During the first quarter of 2024, we commenced the Advancing Agility & Automation Initiative to improve supply chain and manufacturing-related spend, optimize selling, general and administrative expenses, leverage new technology and business models to further simplify and automate processes, and generate long-term savings. During the second quarter of 2025, business realignment charges related primarily to severance and employee benefit costs. During the second quarter of 2024, business realignment charges related primarily to third-party costs supporting the design and implementation of the new organizational structure, as well as severance and employee benefit costs.
Acquisition and integration-related activities: During the second quarter of 2025, we incurred costs related to the acquisition of the Sour Strips brand from Actual Candy, LLC into our North America Confectionery segment. During the second quarter of 2024, we incurred costs related to the 2023 acquisition of two manufacturing plants from Weaver Popcorn Manufacturing, Inc., and the integration of the 2021 acquisitions of Dot's Pretzels, LLC and Pretzels Inc. into our North America Salty Snacks segment.
Tax effect of all adjustments: This line item reflects the aggregate tax effect of all pre-tax adjustments reflected in the preceding line items of the applicable table. The tax effect for each adjustment is determined by calculating the tax impact of the adjustment on the Company's quarterly effective tax rate, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to our 2025 Full-year Financial Outlook and other statements regarding our business outlook and financial performance. Many of these forward-looking statements can be identified by the use of words such as "anticipate," "assume," "believe," "continue," "estimate," "expect," "forecast," "future," "intend," "plan," "potential," "predict," "project," "strategy," "target" and similar terms, and future or conditional tense verbs like "could," "may," "might," "should," "will" and "would," among others. These statements are made based upon current expectations that are subject to risk and uncertainty. Because actual results may differ materially from those contained in the forward-looking statements, you should not place undue reliance on the forward-looking statements when deciding whether to buy, sell or hold the Company's securities. Factors that could cause results to differ materially include, but are not limited to: disruptions or inefficiencies in our supply chain due to the loss or disruption of essential manufacturing or supply elements or other factors; issues, concerns or regulatory changes related to the quality and safety of our products, ingredients or packaging, human and workplace rights, and other environmental, social or governance matters; changes in raw material and other costs, along with the availability of adequate supplies of raw materials and the Company's ability to successfully hedge against volatility in raw material pricing; the Company's ability to successfully execute business continuity plans to address changes in consumer preferences and the broader economic and operating environment; selling price increases, including volume declines associated with pricing elasticity; market demand for our new and existing products; increased marketplace competition; failure to successfully execute and integrate acquisitions, divestitures and joint ventures; changes in governmental laws, regulations and policies, including taxes and tariffs; political, economic, and/or financial market conditions, including with respect to inflation, rising interest rates, slower growth or recession, changes in the
The Hershey Company | ||||||||||
Consolidated Statements of Income | ||||||||||
for the periods ended June 29, 2025 and June 30, 2024 | ||||||||||
(unaudited) (in thousands except percentages and per share amounts) | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 29, 2025 | June 30, 2024 | June 29, 2025 | June 30, 2024 | |||||||
Net sales | $ 2,614,718 | $ 2,074,480 | $ 5,420,137 | $ 5,327,229 | ||||||
Cost of sales | 1,818,445 | 1,240,735 | 3,679,597 | 2,817,403 | ||||||
Gross profit | 796,273 | 833,745 | 1,740,540 | 2,509,826 | ||||||
| ||||||||||
Selling, marketing and administrative expense | 603,207 | 540,987 | 1,161,879 | 1,158,968 | ||||||
Business realignment costs | 255 | 4,937 | 16,629 | 4,937 | ||||||
| ||||||||||
Operating profit | 192,811 | 287,821 | 562,032 | 1,345,921 | ||||||
Interest expense, net | 46,035 | 41,373 | 90,657 | 81,195 | ||||||
Other (income) expense, net | (2,336) | 574 | (1,391) | 32,594 | ||||||
| ||||||||||
Income before income taxes | 149,112 | 245,874 | 472,766 | 1,232,132 | ||||||
Provision for income taxes | 86,393 | 64,980 | 185,844 | 253,785 | ||||||
| ||||||||||
Net income | $ 62,719 | $ 180,894 | $ 286,922 | $ 978,347 | ||||||
| ||||||||||
Net income per share | - Basic | - Common | $ 0.32 | $ 0.92 | $ 1.45 | $ 4.93 | ||||
- Diluted | - Common | $ 0.31 | $ 0.89 | $ 1.41 | $ 4.80 | |||||
- Basic | - Class B | $ 0.29 | $ 0.83 | $ 1.31 | $ 4.48 | |||||
| ||||||||||
Shares outstanding | - Basic | - Common | 148,247 | 147,893 | 148,175 | 203,942 | ||||
- Diluted | - Common | 203,188 | 203,006 | 203,168 | 203,367 | |||||
- Basic | - Class B | 54,614 | 54,614 | 54,614 | 54,614 | |||||
| ||||||||||
Key margins: | ||||||||||
Gross margin | 30.5 % | 40.2 % | 32.1 % | 47.1 % | ||||||
Operating profit margin | 7.4 % | 13.9 % | 10.4 % | 25.3 % | ||||||
Net margin | 2.4 % | 8.7 % | 5.3 % | 18.4 % | ||||||
The Hershey Company | |||||||||||||
Supplementary Information – Segment Results | |||||||||||||
for the periods ended June 29, 2025 and June 30, 2024 | |||||||||||||
(unaudited) (in thousands except percentages) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 29, 2025 | June 30, 2024 | % Change | June 29, 2025 | June 30, 2024 | % Change | ||||||||
Net sales: | |||||||||||||
North America Confectionery | $ 2,085,468 | $ 1,579,826 | 32.0 % | $ 4,385,608 | $ 4,287,136 | 2.3 % | |||||||
North America Salty Snacks | 315,519 | 289,894 | 8.8 % | 593,317 | 565,000 | 5.0 % | |||||||
International | 213,731 | 204,760 | 4.4 % | 441,212 | 475,093 | (7.1) % | |||||||
Total | $ 2,614,718 | $ 2,074,480 | 26.0 % | $ 5,420,137 | $ 5,327,229 | 1.7 % | |||||||
| |||||||||||||
Segment income: | |||||||||||||
North America Confectionery | $ 503,929 | $ 464,496 | 8.5 % | $ 1,200,303 | $ 1,412,692 | (15.0) % | |||||||
North America Salty Snacks | 66,480 | 52,204 | 27.4 % | 108,333 | 90,910 | 19.2 % | |||||||
International | 19,795 | 25,010 | (20.8) % | 48,521 | 67,760 | (28.4) % | |||||||
Total segment income | 590,204 | 541,710 | 9.0 % | 1,357,157 | 1,571,362 | (13.6) % | |||||||
Unallocated corporate expense (1) | 179,647 | 158,232 | 13.5 % | 338,487 | 326,917 | 3.5 % | |||||||
Unallocated mark-to-market losses | 200,727 | 53,371 | NM | 412,181 | (164,644) | NM | |||||||
Costs associated with business | 15,139 | 39,000 | (61.2) % | 40,992 | 55,666 | (26.4) % | |||||||
Acquisition and integration-related | 1,880 | 3,286 | (43.0) % | 3,465 | 7,502 | (53.8) % | |||||||
Operating profit | 192,811 | 287,821 | (33.0) % | 562,032 | 1,345,921 | (58.2) % | |||||||
Interest expense, net | 46,035 | 41,373 | 11.3 % | 90,657 | 81,195 | 11.7 % | |||||||
Other (income) expense, net | (2,336) | 574 | NM | (1,391) | 32,594 | (104.3) % | |||||||
Income before income taxes | $ 149,112 | $ 245,874 | (39.4) % | $ 472,766 | $ 1,232,132 | (61.6) % | |||||||
|
(1) Includes centrally-managed (a) corporate functional costs relating to legal, treasury, finance and human resources, (b) expenses associated with the oversight and administration of our global operations, including warehousing, distribution and manufacturing, information systems and global shared services, (c) non-cash stock-based compensation expense and (d) other gains or losses that are not integral to segment performance. |
(2) Net (gains) losses on mark-to-market valuation of commodity derivative positions recognized in unallocated derivative losses (gains). |
NM - not meaningful |
Three Months Ended | Six Months Ended | ||||||||
June 29, 2025 | June 30, 2024 | June 29, 2025 | June 30, 2024 | ||||||
Segment income as a percent of net sales: | |||||||||
North America Confectionery | 24.2 % | 29.4 % | 27.4 % | 33.0 % | |||||
North America Salty Snacks | 21.1 % | 18.0 % | 18.3 % | 16.1 % | |||||
International | 9.3 % | 12.2 % | 11.0 % | 14.3 % | |||||
The Hershey Company | |||
Consolidated Balance Sheets | |||
as of June 29, 2025 and December 31, 2024 | |||
(in thousands of dollars) | |||
Assets | June 29, 2025 | December 31, 2024 | |
(unaudited) | |||
Cash and cash equivalents | $ 912,345 | $ 730,746 | |
Accounts receivable - trade, net | 820,220 | 800,402 | |
Inventories | 1,842,295 | 1,254,094 | |
Prepaid expenses and other | 850,693 | 974,215 | |
| |||
Total current assets | 4,425,553 | 3,759,457 | |
| |||
Property, plant and equipment, net | 3,442,194 | 3,458,853 | |
Goodwill | 2,713,018 | 2,705,753 | |
Other intangibles | 1,912,610 | 1,873,866 | |
Other non-current assets | 1,111,333 | 1,111,867 | |
Deferred income taxes | 41,029 | 37,065 | |
| |||
Total assets | $ 13,645,737 | $ 12,946,861 | |
| |||
Liabilities and Stockholders' Equity | |||
| |||
Accounts payable | $ 1,450,549 | $ 1,159,177 | |
Accrued liabilities | 875,974 | 807,341 | |
Accrued income taxes | 98,795 | 51,036 | |
Short-term debt | 164,968 | 1,306,976 | |
Current portion of long-term debt | 303,021 | 604,965 | |
| |||
Total current liabilities | 2,893,307 | 3,929,495 | |
| |||
Long-term debt | 5,176,436 | 3,190,210 | |
Other long-term liabilities | 652,155 | 688,259 | |
Deferred income taxes | 409,221 | 424,243 | |
| |||
Total liabilities | 9,131,119 | 8,232,207 | |
| |||
Total stockholders' equity | 4,514,618 | 4,714,654 | |
| |||
Total liabilities and stockholders' equity | $ 13,645,737 | $ 12,946,861 | |
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SOURCE The Hershey Company
FAQ
What were Hershey's (HSY) key financial results for Q2 2025?
How did HSY revise its 2025 earnings guidance?
What were the main factors affecting Hershey's profit margins in Q2 2025?
How did Hershey's North America Confectionery segment perform in Q2 2025?
What is Hershey's expected tariff expense for 2025?
