Hershey To Up Candy Prices 11 Percent

Chocolatier Cites Soaring Cost Of Raw Materials

(AP)  The Hershey Co. said Friday it is raising prices on its products by an average of 11 percent as the nation's largest candymaker tries to stem the impact of soaring commodities costs, and trimmed its projections for 2008 and 2009.

The price increase was the second already this year for the candy company known for its Hershey's chocolate bars, bite-sized Kisses and Reese's peanut butter cups.

The immediate increase was necessary to offset "significant increases" in the cost of raw materials such as sugar, cocoa and peanuts - up as much as 45 percent since the start of the year - as well as the growing cost of fuel, utilities and transportation, Hershey said.

"Commodity costs have been volatile over the last several years and continue to remain at levels that are well above historical averages," Hershey's President and Chief Executive David J. West said in a statement.

The Hershey, Pa.-based chocolatier said its commodities costs will grow by more than $110 million this year - a figure that could double in 2009.

Hershey's biggest domestic competitors, Mars Inc. and Nestle USA Inc., did not immediately respond Friday afternoon to questions about whether those companies have raised prices, or plan to.

Meanwhile, Hershey also narrowed its 2008 earnings and revenue guidance because of the price hikes.

The company it expects net earnings per share between $1.43 and $1.51. Excluding business alignment and impairment charges, the company predicts its earnings will be between $1.85 and $1.90. However, Hershey cautioned that due to current economic conditions, its profit would likely fall at the low end of that range.

It expects sales to grow 3 to 4 percent.

Analysts surveyed by Thomson Reuters expect the company to earn $1.85 per share on revenue of $5.11 billion, a 3 percent increase.

In 2009, Hershey said it expects sales to grow between 2 and 3 percent, down from its earlier projection of a 3 to 5 percent increase. The company also warned its 2009 adjusted profit would likely miss its target of 6 percent to 8 percent growth.

Analysts expect Hershey to earn $1.91 per share in 2009 on revenue of $5.31 billion, a 4 percent increase.

Hershey shares fell $2.44, or 5.8 percent to $39.20 in after hours trading, after closing regular trading up 43 cents at $41.62.

[rushlimpdrug]

I''m happy, as long as the price of candy doesn''t go up.

[toldyouso12]

I did not realize Hershey had moved their chocolate making to Mexico. Good bye Hershey products, I can do without helping another company''s outsourcing.

[my2centss]

The petroleum has affected the price in the artificial vanillin too. Never thought it would directly, maybe indirectly through shipping.

[beehive21-2009]

If your eating candy and know anyone eating candy,ask them to stop ,its poison,rots your teeth ,too.

[arnldmartin]

just another item now on my do not buy list,the list is getting longer by the day.this is probably what happened to the ROMAN EMPIRE.

[hypnotoad72]

hey certainly can''''t make their products any smaller. Now they have to be honest when they want to milk us a little more. And what a shame that they can''''t even make chocolate products in the USA anymore.

Posted by u-r-right
----

They could, but it''s cheaper to do so in Mexico...

[wineberry]

I''ve cut way back on eating candy bars anyway, so it won''t affect me that much. Plus, with the smaller bars and increased price that will just cause me to pass it by and leave it on the counter that much more. Hershey figured by going to Mexico that it would cost them less to make the candy, but now they are charging more for fuel and commodity costs -- well they can just keep their candy and eat it themselves, which is what they will windup having to do in the longrun.

[u-r-right]

They certainly can''t make their products any smaller. Now they have to be honest when they want to milk us a little more. And what a shame that they can''t even make chocolate products in the USA anymore.

[skeezix06]

Actually the other day while standing in line at the grocery store looking at the candy bars, I realized the Hershey corporation is doing me a favor. I look at the candy bar, pick it up and feel how much smaller it is than it used to be, look at the exaggerated price they''ve stuck on it, lose my appetite for Hershey chocolate, put it back on the shelf and leave without it. Sending the jobs to Mexico only confirms how right I am at stopping my Hershey chocolate purchases.

It''s been nice and it''s been real, Hershey, but it''s time to recognize that you''re doing me a favor and move on to other things. Thank you for breaking me of my 40+ year old habit.

[dan_shields-2009]

everyone is struggling.