01—Abstract
Summary
Summary of the 10-Q filed October 30, 2025. Cited figures are marked; the original filing is the authoritative source.
The Hershey Company's third-quarter 2025 results (quarter ended September 28, 2025) showed sharply lower profitability despite higher sales.
Net sales rose to $3,181.4 milliona from $2,987.5 million, an increase of 6.5%, driven by favorable price realization of approximately 6% and slightly positive volume. However, gross margin fell to 32.6% from 41.3%, primarily due to unfavorable commodity (cocoa) and tariff costs and unfavorable mix. Operating profit declined 29.1% to $434.6 million, and net income fell 38.1% to $276.3 million, with diluted EPS of $1.36 versus $2.20 a year earlier.
The effective tax rate rose to 25.7% from 14.0%. For the first nine months of 2025, net sales were $8,601.6 millionb, up 3.4%, while net income declined 60.5% to $563.2 million and diluted EPS was $2.77 versus $7.00. Gross margin for the nine months was 32.3% compared with 45.0%.
The nine-month results also include $244.4 millionc of unfavorable mark-to-market activity on commodity derivatives within cost of sales, and the filing notes commodity derivative losses of $387.9 million in unallocated items. Operating cash flow was $1,350.8 million, down from $1,590.0 million. The balance sheet reflects a larger debt load.
In the first quarter of 2025 the company issued $2.0 billiond of net-proceeds notes, and it repaid $600 million of maturing notes. Total short- and long-term debt was $5.4 billion, and cash rose to $1.2 billion.
Management states it expects tariff expense to negatively impact full-year results and that 2025 capital expenditures will be approximately $425 million. The company also announced it would remove certified colors from its snacks by the end of 2027 and expects the LesserEvil acquisition to close by the end of 2025.
02—Key points
Key Highlights
- Net sales increased 6.5% to $3,181.4 million in Q3 2025, with price realization of approximately 6% and slightly positive volume.
- Gross margin fell to 32.6% from 41.3% in Q3, driven by commodity (cocoa) and tariff costs and unfavorable mix.
- Operating profit declined 29.1% to $434.6 million; net income fell 38.1% to $276.3 million and diluted EPS was $1.36 versus $2.20.
- For the nine months, net income decreased 60.5% to $563.2 million, with gross margin of 32.3% versus 45.0%, including $244.4 million of unfavorable commodity derivative mark-to-market activity in cost of sales.
- Total debt rose to $5.4 billion after the issuance of $2.0 billion of net-proceeds notes in 2025, partly offset by $604.6 million of repayments; cash and equivalents reached $1.2 billion.
- Management expects tariff expense to negatively impact full-year results and expects 2025 capital expenditures of approximately $425 million.
- A new $1.875 billion unsecured revolving credit facility was entered into on October 21, 2025, replacing the prior $1.35 billion facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Hershey kept $0.09.
- Revenue$3.18B100.0%
- Cost of revenue−$2.14B67.4%
- Gross profit$1.04B32.6%
- Operating costs−$602.8M18.9%
- Operating income$434.6M13.7%
- Interest, other & tax−$158.3M5.0%
- Net income$276.3M8.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed October 30, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $3.18B$2.99B | +6.5% |
| Cost of Revenue | $2.14B$1.75B | +22.2% |
| Gross Profit | $1.04B$1.23B | −15.8% |
| SG&A Expenses | $600.54M$591.92M | +1.5% |
| Operating Income | $434.58M$613.16M | −29.1% |
| Interest Expense | $61.46M$51.91M | +18.4% |
| Net Income | $276.32M$446.30M | −38.1% |
05—Questions
Frequently Asked Questions
Why did Hershey's profitability decline despite higher net sales in Q3 2025?
Net sales rose 6.5% on about 6% price realization, but cost of sales rose 22.2%, driven primarily by higher cocoa commodity costs and tariffs. Gross margin fell to 32.6% from 41.3%, and SM&A expenses and interest expense also increased, pulling operating profit down 29.1%.
How did the company's debt position change in 2025?
In the first quarter of 2025 the company issued four series of notes totaling $2.0 billion in net proceeds, and it repaid $300 million each of its 0.900% and 3.200% notes at maturity. Short-term debt fell to $214.9 million from $1,307.0 million as commercial paper was reduced, and total short- and long-term debt was about $5.4 billion.
What is the outlook for tariffs and commodity costs?
Management said it expects tariff expense to negatively impact full-year results and that tariff outcomes remain uncertain. Cocoa prices remained elevated versus historical levels, with an average cocoa futures price of $3.97 per pound in the first nine months of 2025, and management noted that the outlook for cocoa prices remains uncertain.
Did the company repurchase shares or change its dividend in 2025?
No shares were repurchased in the first nine months of 2025 under the authorization, versus $494.2 million in the same period of 2024. Quarterly dividends were maintained at $1.370 per Common Stock share and $1.245 per Class B share, and approximately $470 million remains available under the December 2023 repurchase authorization.
What acquisitions and strategic moves were disclosed?
The company entered into a merger agreement on March 31, 2025 to acquire LesserEvil, LLC, an organic popcorn and puffed snack maker, expected to close by the end of 2025. It also purchased the Fulfil brand in North America for $73.6 million and announced it will remove all certified Food, Drug & Cosmetic colors from its snacks by the end of 2027.
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