HERSHEY, Pa. Hershey Co. has a bellyache from the rise of dairy costs.
Known as the largest candy maker in the U.S., the company reported that its third-quarter profit plunged 66 percent and sales unexpectedly fell as it lost its market share.
Net income declined to $62.8 million, or 27 cents per share. Sales dropped 1.2 percent to $1.4 billion. The company, which accounts 11 percent of its sales outside the U.S., had not disclosed the impact the weaker dollar had on earnings.
The candymaker has experienced several setbacks over the past few years. On Oct. 5, the company announced a new chief executive officer would replace Richard H. Lenny by Dec. 1.
During his years at the helm, the company did not recover from its stumble last year while attempting to put more emphasis on what it considered a “fast growing, high-margin segment”: organic and dark chocolates.
In the midst of these impediments, Lenny had sought to expand Hershey’s reach with joint ventures in Asia to keep up with competitors. Additionally, Hershey announced it would close six U.S. and Canadian plants and cut more than 3,000 workers in the two countries, including 900 total at its namesake town, and shift more of its production to contractors and a new plant under construction in Mexico.
Meanwhile, Mars Company, Hershey’s main rival, has trumped the competition by increasing its share of the U.S. candy market through the sale and distribution more varieties of its notable candy, M&Ms, among others.
Hershey increased prices in April for the first time in two years. The price increase had “little impact” on the quarter because it was cancelled out by discounts Hershey had previously promised to retailers, chief financial officer Bert Alfonso said on the financial earnings call.
Hershey shares dropped $1.21 to $43.08 in New York Stock Exchange composite trading Wednesday afternoon.