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Hershey Co. (NYSE:HSY)

This company has been moved to the archive! The financial data has not been updated since July 27, 2023.

Common-Size Income Statement

Hershey Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net sales 100.00 100.00 100.00 100.00 100.00
Cost of sales -56.82 -54.87 -54.58 -54.64 -54.11
Gross profit 43.18% 45.13% 45.42% 45.36% 45.89%
Selling, marketing and administrative expense -21.46 -22.31 -23.20 -23.87 -24.06
Long-lived asset impairment charges 0.00 0.00 -0.11 -1.41 -0.74
Business realignment costs -0.02 -0.04 -0.23 -0.10 -0.25
Operating profit 21.70% 22.78% 21.87% 19.98% 20.84%
Interest expense -1.34 -1.45 -1.88 -1.90 -1.88
Interest income 0.02 0.03 0.05 0.10 0.10
Interest expense, net -1.32% -1.42% -1.83% -1.80% -1.78%
Write-down of equity investments in partnerships qualifying for historic and renewable energy tax credits -1.81 -1.27 -1.54 -0.63 -0.65
Non-service cost components of net periodic benefit cost relating to pension and other post-retirement benefit plans -0.18 -0.06 -0.15 -0.26 -0.27
Other income (expense), net 0.01 0.00 0.00 0.00 -0.05
Other income (expense), net -1.98% -1.33% -1.70% -0.89% -0.96%
Income before income taxes 18.40% 20.03% 18.34% 17.29% 18.10%
Provision for income taxes -2.61 -3.50 -2.69 -2.93 -3.07
Net income including noncontrolling interest 15.79% 16.53% 15.65% 14.36% 15.03%
Net (gain) loss attributable to noncontrolling interest 0.00 -0.06 0.04 0.04 0.08
Net income attributable to The Hershey Company 15.79% 16.47% 15.69% 14.40% 15.11%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

The financial performance from 2018 to 2022 exhibits a period of relative stability in net profitability, characterized by a strategic offset between rising direct costs and improving operational efficiencies.

Gross Profitability and Cost of Sales
Gross profit margins remained consistent between 45.13% and 45.89% from 2018 through 2021. However, a notable contraction occurred in 2022, where gross profit fell to 43.18%. This decline is directly attributable to an increase in the cost of sales, which rose to 56.82% of net sales in 2022, up from a five-year average of approximately 54.5%.
Operating Expense Management
A consistent downward trend is observed in selling, marketing, and administrative expenses, which decreased annually from 24.06% of net sales in 2018 to 21.46% in 2022. This sustained reduction in operating overhead helped mitigate the impact of gross margin compression, allowing the operating profit margin to remain resilient.
Operating Profit Trends
Operating profit as a percentage of net sales demonstrated an upward trajectory from 2020 (21.87%) to a peak in 2021 (22.78%), before settling at 21.70% in 2022. The ability to maintain operating margins above 20% throughout the period suggests strong operational leverage and effective cost control within the administrative functions.
Non-Operating Items and Interest
Net interest expenses showed a general decline, moving from -1.78% of net sales in 2018 to -1.32% in 2022, indicating a reduction in the relative cost of debt servicing. Conversely, write-downs of equity investments in partnerships remained a volatile drag on earnings, fluctuating between -0.63% and -1.81% of net sales over the analyzed period.
Net Income Performance
Net income attributable to the company remained stable, fluctuating within a range of 14.40% to 16.47%. The peak profitability occurred in 2021 at 16.47%, followed by a slight moderation to 15.79% in 2022. This stability indicates that the company successfully managed bottom-line margins despite fluctuations in input costs and non-operating write-downs.

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