NEW YORK (AP) — Hershey Co.'s second-quarter net income fell 35 percent because of charges for restructuring and to write down the value of a joint venture in India. But backed by a massive advertising push, revenue rose as the company sold more chocolate.
The maker of Hershey's Kisses and Reese's peanut butter cups 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.
Excluding one-time items, the company earned 51 cents per share. That tops analyst expectations for 46 cents.
Revenue grew 5 percent to $1.23 billion.
Hershey has been working to cut costs and has pumped more money into advertising. Hershey's ad spending rose 50 percent in the second quarter. 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.
The nation's second-largest candy maker has been advertising core brands such as Kit Kat, Twizzlers and its namesake candy. It's also launching new products such as York Pieces. Shoppers traded down to less expensive store brands in the weak economy so advertising name brands is a way to keep them buying.
Hershey boosted its outlook for the year, saying it expects to spend less on promotions and see earlier savings from its cost cutting initiatives.
The company previously announced a plan to cut costs by $80 million a year by laying off workers in its hometown, shutting down production at its flagship plant and spending up to $300 million to modernize other facilities.
For the full year, Hershey expects adjusted earnings of $2.47 to $2.52 — an increase in the low to mid teens — on a 7 percent increase in net sales. Analysts expect $2.51, according to Thomson Reuters.
The company wrote down the value of its Godrej Hershey Ltd. joint venture in India. Hershey said the business has been growing but more slowly than expected because of slower development plans and a weak environment that means lower prices and delayed expansion. However, Hershey said India is still an important market for the company.