01—Abstract
Summary
Summary of the 10-K filed February 18, 2025. Cited figures are marked; the original filing is the authoritative source.
The Hershey Company reported net sales of $11,202.3 milliona in 2024, up $37.3 million, or 0.3%, from $11,165.0 million in 2023.
Gross margin rose to 47.3% from 44.8%, driven by a $563.0 millionb favorable year-over-year mark-to-market impact on commodity derivatives and favorable price realization, partially offset by higher commodity costs. Operating profit increased 13.2% to $2,898.2 million, and net income rose 19.3% to $2,221.2 million, or $10.92 per diluted share versus $9.06 in 2023. The filing also notes that volume declined approximately 2% in 2024, with declines in North America Confectionery and International, partially offset by growth in North America Salty Snacks.
The filing describes a dynamic environment. Management states that consumer behavior shifted and that cost fatigue constrained spending, leading to overall declines in consumer demand for its products. Cocoa futures averaged $3.45c per pound in 2024 versus $1.49 in 2023, and the filing notes that the commodity price increase remains a primary incremental cost pressure.
Segment income fell in North America Confectionery (down 5.5% to $2,945.7 milliond) and International (down 24.8% to $111.5 million), while North America Salty Snacks segment income rose 26.0% to $199.4 million. From a balance sheet and cash flow perspective, operating cash flow was $2,531.6 million and capital expenditures were $605.9 million, with the company expecting 2025 capital spending of approximately $425 million to $450 million. Dividends paid totaled $1,084.8 million, and the Board declared a quarterly dividend of $1.370 per share of Common Stock in February 2025.
Total debt rose to $5.1 billion from $4.8 billion, largely from commercial paper, and cash and cash equivalents ended the year at $730.7 million. McLane Company, Inc. accounted for approximately 27% of 2024 consolidated net sales, and Hershey Trust Company, as trustee for the Milton Hershey School Trust, retains voting control of the company.
02—Key points
Key Highlights
- Net sales of $11.20 billion were essentially flat, up 0.3%, with price realization of approximately 3% offset by volume declines of approximately 2%.
- Gross margin expanded to 47.3% from 44.8%, supported by a $563.0 million favorable mark-to-market swing on commodity derivatives, though higher cocoa costs remained a headwind.
- Net income increased 19.3% to $2.22 billion, and diluted EPS rose to $10.92 from $9.06, aided by lower share count from repurchases.
- North America Confectionery segment income declined 5.5% to $2.95 billion, while North America Salty Snacks segment income grew 26.0% to $199.4 million.
- International segment income fell 24.8% to $111.5 million, driven by higher commodity costs and unfavorable foreign currency exchange rates.
- Operating cash flow was $2.53 billion, and dividends paid totaled $1.08 billion; total debt rose to $5.1 billion from $4.8 billion, primarily through commercial paper.
- The company initiated the Advancing Agility & Automation Initiative, with total pre-tax costs estimated at $200 million to $250 million through 2026 and targeted ongoing annual savings of approximately $300 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Hershey kept $0.20.
- Revenue$11.20B100.0%
- Cost of revenue−$5.90B52.7%
- Gross profit$5.30B47.3%
- Operating costs−$2.40B21.4%
- Operating income$2.90B25.9%
- Interest, other & tax−$677.0M6.0%
- Net income$2.22B19.8%
Where FY2024 revenue went
$11.20B- Cost of revenue: $5.90B, 53% of revenue
- SG&A: $2.37B, 21% of revenue
- Net income: $2.22B, 20% of revenue
- R&D: $55.8M, 0.5% of revenue
- Interest, other & tax: $677.0M, 6.0% of revenue
Kept 20% as net incomeR&D $55.8M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed February 18, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $11.20B$11.16B | +0.3% |
| Cost of Revenue | $5.90B$6.17B | −4.3% |
| Gross Profit | $5.30B$5.00B | +6.1% |
| R&D Expenses | $55.80M$50.03M | +11.5% |
| SG&A Expenses | $2.37B$2.44B | −2.6% |
| Operating Income | $2.90B$2.56B | +13.2% |
| Interest Expense | $194.24M$176.07M | +10.3% |
| Net Income | $2.22B$1.86B | +19.3% |
05—Questions
Frequently Asked Questions
How did Hershey's profitability change in 2024?
Operating profit rose 13.2% to $2,898.2 million, and operating margin increased to 25.9% from 22.9%. The increase was driven primarily by higher gross profit and lower SM&A expenses, partially offset by higher business realignment costs. A $563.0 million favorable mark-to-market impact on commodity derivatives contributed significantly to the gross margin improvement.
What are the main risks to Hershey's business highlighted in the filing?
Key risks include commodity price volatility, particularly cocoa, which increased sharply in 2024 and is described as a primary incremental cost; declining consumer demand driven by cost fatigue and shifting consumption patterns; customer concentration, with McLane Company accounting for approximately 27% of net sales; international operations exposure; and the multi-year ERP implementation. The filing also notes cybersecurity threats and evolving EU deforestation regulations.
How is Hershey returning capital to shareholders?
The company paid $1,084.8 million in dividends in 2024 and repurchased $494.2 million of shares, including $400.0 million under pre-approved programs. The annual dividend rate on Common Stock was $5.480 per share, and the Board declared a $1.370 quarterly dividend in February 2025. Approximately $470 million remained available under the December 2023 repurchase authorization.
Why did Hershey's debt levels increase in 2024?
Total short- and long-term debt rose to $5.1 billion from $4.8 billion, primarily due to an increase of $587 million in short-term debt, largely commercial paper. This was partially offset by the repayment of $300 million of 2.050% Notes in November 2024. The company stated it believes its liquidity is adequate for anticipated funding needs.
What is the outlook for capital spending and debt repayments in 2025?
The company expects 2025 capital expenditures, including capitalized software, of approximately $425 million to $450 million, as capital spending as a percentage of sales is expected to return to historical levels. It also expects long-term debt repayments of approximately $600 million, reflecting the maturity of $300 million of 0.900% Notes due June 2025 and $300 million of 3.200% Notes due August 2025.
06—Continue