Hershey(US:HSY)2025-05-01 12:30Financial Data and Key Metrics Changes - The company expects EPS to decline about 30% for the first half of the year, with Q2 expected to be down less than Q1, which was down over 30% [12][13][14] - Gross margin for Q2 is expected to decrease by approximately 700 basis points, influenced by tariff components and increased SG&A expenses [14][13] Business Line Data and Key Metrics Changes - The company reported a 10% increase in its business, with a 100 basis point increase in market share, particularly in the sweets category [23] - The company anticipates low single-digit growth in everyday chocolate for the second half of the year, driven by strong innovation [35] Market Data and Key Metrics Changes - The company has seen strong growth in international markets, particularly in Brazil, where organic sales grew double digits [98] - The competitive environment in international markets has normalized, aiding the company's performance [98] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through various strategies, including lobbying and operational adjustments [10][9] - The company aims to continue growing its chocolate business while expanding into the salty snacks and sweets categories, targeting younger and more diverse demographics [79][78] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a path to earnings growth next year, despite current tariff challenges [20][21] - The company is actively monitoring consumer sentiment and adapting its strategies to maintain market share amid a weak consumer environment [31][30] Other Important Information - The company is not planning any buybacks for the year but remains open to capital allocation opportunities depending on how the year unfolds [99] - The company is investing in innovation and marketing to ensure long-term growth, particularly in the chocolate category [113][114] Q&A Session Summary Question: What is the risk of tariff expenses in Q3 and Q4? - Management indicated that unmitigated tariff impacts could reach up to $100 million per quarter, primarily from cocoa and Canadian retaliatory tariffs [8][9] Question: How should investors think about the magnitude of EPS decline in Q2? - Management expects EPS to be down about 30% for the first half, with Q2 showing a decline less than Q1 due to strong net sales [12][14] Question: What is the outlook for earnings growth next year? - Management maintains a positive outlook for earnings growth next year, despite the challenges posed by tariffs [20][21] Question: How is the company addressing consumer trends towards healthier eating? - Management noted that while consumer sentiment is weak, the chocolate category remains resilient, and they are focusing on premium and permissible products [31][30] Question: What is the competitive landscape in the U.S. chocolate market? - Management reported no significant changes in the competitive landscape, with smaller players softening and larger players increasing innovation [124] Question: How will the company approach pricing in light of cocoa prices? - Management confirmed that pricing will increase in Q2 and Q3 as part of their seasonal pricing strategy [128]