Hershey’s second-quarter net income fell 35% because of charges for restructuring and to write down the value of a joint venture in India. However, revenue still rose as the company sold more in terms of volume on the back of raised advertising spending.
The company has left its earnings outlook for the year unchanged. It earned $46.7 million, or 20 cents per share, for the three months ending July 4. That’s down from net income of $71.3 million, or 31 cents per share, a year earlier.
The company now plans to boost advertising levels by about 45 percent to 50 percent this year, up from its previous estimate of a 35 percent to 40 percent increase. But the additional increase in advertising won’t take place until late in the year, so the effect on sales won’t be felt until 2011. Some of that advertising budget will go toward growing Hershey’s business in international markets, where quarterly sales rose at a low double-digit rate..
The latest results included charges of 11 cents per share for a supply chain modernisation program and 20 cents to write down goodwill for the India venture,
“We will continue to apply our global confectionery know-how to India and other international markets, as well as to look for other opportunities in key geographies,” says chief executive David West in a conference call. He said Asia and Latin America were Hershey’s top priority in terms of acquisitions.