Hershey Company (HSY) 2Q16 Earnings Call Notes

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Margins are the focus for HSY

“You have heard us talk about our focus against the cost of our operations coming up. We talked about the $135 million we want to deliver this year. So I would just come back and say, as you know, we are a margin focused company. We want to make sure that our opportunities and our costs are well aligned and we want to continue to be able to invest in our brands and our people as we go forward. But as it might relate to something hypothetical, I just can’t comment on something like that.” J.P. Bilbrey – Chairman, President and Chief Executive Officer

 

HSY sees a marketing opportunity in this year’s Olympics and will be an official sponsor

“we believe we will see a sequential improvement in our marketplace results over the remainder of the year, driven by new advertising copy, innovation and higher levels of in-store merchandising and display, starting in July with the Summer Olympics in Rio. Our company, for the first time ever, is an official sponsor of the U.S. Olympic and Paralympic teams. Packaging that proudly displays patriotic coloring such as red, white and blue lettering on our iconic Hershey’s Milk Chocolate bar began in the second quarter.” J.P. Bilbrey – Chairman, President and Chief Executive Officer

 

Innovation in the form of blurring snack categories may be the solution to health trends

“So I would say that it is – the innovation that’s coming up is really what I would call Snackfection in terms of blurring – the blurring that’s occurring between various snack categories. Think salty snacks and confection or other categories, cookies and confection, etcetera. So it’s really leveraging the fact that consumers are looking for more of those complex eats and opportunities to play at the seams between categories. I think there – that largely our confection or hardcore mainstream confection brands will continue to offer primarily indulgent benefits. But there are some places where I think there is a little bit of crossover. For example, Snack Mix certainly has nuts, pretzels, etcetera and consumers are seeing that a little closer to having some food value than a straight chocolate.” Patricia Little – Senior Vice President and Chief Financial Officer

 

Despite uncertainty of Chinese market, cost has been minimal thus far

“We are selling things. So, as I like to think about it kind of in a simple way, are we making stuff, shipping it, selling it and collecting money? And all of those things are working for us. So, I think that the market in China, as you have heard from a lot of companies, is pressured. I think we would align with that… And then as you think about the overall P&L, the impact of China restructure on our P&L this year is really relatively limited. So, we think that will continue to also help us as we go forward.” J.P. Bilbrey – Chairman, President and Chief Executive Officer