Hershey Co (HSY)

Hershey Co: A Comprehensive Overview

Company Profile:

History:

• Founded in 1894 by Milton Hershey as the Lancaster Caramel Company, later renamed Hershey Chocolate Company.
• The company expanded rapidly throughout the early 20th century, becoming a leading chocolate manufacturer in the US.
• In 2015, the company acquired Amplify Snack Brands, expanding its portfolio beyond chocolate and confectionery into salty snacks.
• Today, the Hershey Co. is one of the largest candy and snack companies in the world, with operations in over 80 countries.

Business Areas:

• North America Chocolate: This segment comprises the majority of the company's business, encompassing chocolate brands like Hershey's, Reese's, Kit Kat, and Twizzlers, among others.
• Global Confectionary: This segment includes international chocolate and non-chocolate confectionery businesses, including brands like Brookside, Ice Breakers, and Droste.
• North America Snacking: Following the Amplify acquisition, this segment includes popular snack brands such as SkinnyPop popcorn, Pirate's Booty, and Crunchmaster.

Leadership:

• President and Chief Executive Officer: Michele Buck
• Chief Financial Officer: Steven Voskuil
• Chairman of the Board: John Bilbrey
• Hershey operates a Board of Directors and Executive Leadership Team responsible for overseeing company strategy and operations.

Top Products and Market Share:

• Hershey's top products include:
  • Hershey's chocolate bars (including classic milk chocolate and special editions like Cookies & Cream)
  • Reese's peanut butter cups
  • Kit Kat chocolate bars
  • Twizzlers licorice
  • Kisses chocolates
• Hershey possesses a dominant market share in chocolate and non-chocolate confectionery within the US.
  • In the US chocolate market, Hershey holds a approximately 30% share.
  • In the US non-chocolate confectionery market, Hershey commands a share close to 45%.
• Competitors in the US confectionery market include Mars Wrigley and Mondelez. While Hershey retains a leading position, the market is quite competitive, with these competitors claiming significant shares of the market.

Total Addressable Market:

• Hershey operates within the global confectionery market.
• This market encompasses chocolate, candy, gum, mints, and other sweet treats.
• The global confectionery market is massive, estimated to be valued at approximately $275 billion in 2023, with projections of reaching $335 billion by 2028.

Financial Performance:

• Recent Financial Performance:
  • Revenue: $9.4 billion in 2022 (a 12.1% increase year-over-year)
  • Net Income: $1 billion in 2022 (a 7.7% increase year-over-year)
  • Profit Margin: 10.3% in 2022
  • Earnings Per Share (EPS): $5.48 in 2022
  • Cash Flow Statement: Positive and growing with strong operating cash flows.
  • Balance Sheet Health: Healthy balance sheet with manageable debt levels.

Dividends & Shareholder Returns:

• Dividends: Hershey has a long history of paying dividends, with a current annual dividend yield of approximately 1.8%.
• The company has also consistently increased its dividend payments over the past decade.
• Shareholder Returns: Strong historical returns, with a total shareholder return of over 160% in the past five years.

Growth Trajectory:

• Historical Growth: Hershey has shown steady growth in recent years, driven by a combination of organic growth and acquisitions.
• Future Projections: Continued moderate growth is expected, fueled by new product introductions, increased focus on international markets, and expanding the snacking business.
• Growth Initiatives: Recent product launches include Hershey's Cookies & Creme and Kit Kat Duos. Additionally, Hershey is expanding into new categories like protein snacks and plant-based alternatives.

Market Dynamics:

• The confectionery industry is characterized by:
  • Strong consumer demand for chocolate and other sweets
  • Growing popularity of premium and innovative products
  • Increasing demand for healthier snack options
  • Heightened competition from both established players and emerging brands

-Hershey's strong brand recognition, diversified product portfolio, and focus on innovation position the company well within this dynamic market.

Competitors:

• Major competitors include:
  • Mars Wrigley (M&M's, Snickers, Twix, Skittles): 14% share of the US chocolate market.
  • Mondelez International (Oreo, Cadbury, Toblerone): 13% share of the US chocolate market.
  • Other notable competitors: Ferrero (Nutella), Lindt & Sprüngli, Godiva.

Challenges and Opportunities:

Challenges:

• Maintaining market share in a highly competitive landscape.
• Balancing innovation with maintaining the popularity of classic products.
• Navigating rising commodity costs and supply chain disruptions.
• Adapting to evolving consumer preferences towards healthier零食.

Opportunities:

• Expanding into emerging markets with high growth potential.
• Leveraging its strong brand portfolio to introduce new product innovations.
• Capitalizing on the growing demand for healthier snacks.
• Utilizing strategic partnerships and acquisitions to gain a competitive edge.

Recent Acquisitions:

• 2023: Dot's Homestyle Pretzels
• 2022: Lily's Sweets (low-sugar chocolate brand)
• 2020: Pirate Brands (Pirate's Booty and Smart Puffs)

AI-Based Fundamental Rating:

Based on an analysis of various financial and market factors, Hershey Co. receives an AI-Based Fundamental Rating of 8 out of 10. This indicates a solid and fundamentally sound company with good growth prospects.

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a financial professional before making any investment decisions.

Sources:

• Hershey Investor Relations: https://investors.thehersheycompany.com/
• Hershey Corporate Website: https://www.thehersheycompany.com/
• The Wall Street Journal: https://www.wsj.com/market-data/quotes/TSE/HSY
• Statista: https://www.statista.com/
• Yahoo Finance: https://finance.yahoo.com/quote/HSY
• Google Finance: https://www.google.com/finance

Additional Notes:

This overview provides a general summary of the Hershey Co. It is recommended to conduct further research and due diligence before making any investment decisions.