Hershey Co. (NYSE:HSY)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows a generally increasing trend over the observed period. Starting from approximately 1.3 billion in 2018, there is a slight decline in 2019, followed by consistent growth through 2022, reaching over 1.8 billion. This indicates improving operational profitability after taxes over the years.

Invested Capital

Invested capital steadily increased from about 6.5 billion in 2018 to nearly 8.8 billion in 2022. The growth reflects ongoing investments or accumulation of assets necessary for business operations, with notable larger increments between 2019 to 2020 and 2020 to 2021.

Return on Invested Capital (ROIC)

The return on invested capital fluctuates within a relatively narrow band but displays an overall positive trajectory. It decreased from 19.91% in 2018 to 18.55% in 2019, then gradually recovered and increased, reaching the highest point of 20.8% in 2022. This suggests improved efficiency in generating returns from the invested capital, especially in the later years.

Over the five-year period ending December 31, 2022, several key financial performance indicators exhibit distinct trends.

Operating profit margin (OPM)

The operating profit margin fluctuated moderately, starting at 19.72% in 2018, dipping slightly to 19.09% in 2019, then increasing to 20.35% in 2020 and reaching a peak of 21.52% in 2021. In 2022, the margin declined to 20.04%, still above the 2018 and 2019 levels. This pattern indicates an overall improvement in operational efficiency with some variability.

Turnover of capital (TO)

The turnover of capital ratio remained relatively stable around 1.19 in 2018 and 2019, experienced a decline in 2020 to 1.08 and further decreased slightly to 1.05 in 2021, suggesting reduced efficiency in capital utilization. However, in 2022, the ratio reverted to 1.19, indicating a recovery in capital turnover efficiency.

Effective cash tax rate (expressed as 1 – CTR)

This indicator shows the proportion of cash taxes effectively paid relative to income. After peaking at 84.81% in 2018, it declined to 81.56% in 2019. The rate then increased to 86.38% in 2020, dropped to 82.9% in 2021, and rose again to 87.24% in 2022. These fluctuations suggest variable cash tax burdens over the years, with the highest effective tax burden occurring in 2022.

Return on invested capital (ROIC)

The return on invested capital followed a slightly declining trend from 19.91% in 2018 to 18.55% in 2019, then showed modest recovery through 2020 and 2021 at 19.05% and 18.76%, respectively. In 2022, ROIC increased significantly to 20.8%, surpassing all prior years in the period. This indicates an improvement in the efficiency and profitability of capital investment in the latest year.

In summary, operational profitability showed resilience with a general upward trajectory until 2021, followed by a slight reduction in 2022. Capital turnover efficiency dipped in the middle of the period but recovered to initial levels by 2022. The effective cash tax rate varied considerably, influencing net cash outflows related to taxes. The return on invested capital experienced a modest decline initially but improved markedly in the last reported year, indicating stronger capital utilization and profitability at the end of the period.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes shows a consistent upward trend over the five-year period. Beginning at approximately 1.54 billion USD in 2018, it exhibits a moderate increase in 2019, followed by a more pronounced rise in 2020 and continuing to grow each subsequent year. By 2022, the NOPBT reaches roughly 2.09 billion USD, indicating sustained profitability growth.

Net Sales

Net sales demonstrate steady and substantial growth throughout the observed period. Starting from approximately 7.79 billion USD in 2018, sales increase slightly in 2019 and continue to rise each year, with a marked acceleration between 2021 and 2022. By the end of 2022, net sales exceed 10.4 billion USD, reflecting strong revenue expansion.

Operating Profit Margin (OPM)

The operating profit margin experiences some variability but remains generally strong across the years. It declines marginally from 19.72% in 2018 to 19.09% in 2019, then improves to peak at 21.52% in 2021 before slightly decreasing to 20.04% in 2022. Despite fluctuations, the margin sustains a healthy level above 19%, reflecting efficient operational control relative to sales.

Net Sales

Net sales demonstrated a consistent upward trajectory over the five-year period. Starting from approximately $7.79 billion in 2018, net sales increased gradually each year, reaching roughly $10.42 billion by the end of 2022. This indicates a sustained growth in revenue, with the most significant year-over-year increase observed between 2021 and 2022.

Invested Capital

Invested capital also showed an overall increasing trend from 2018 through 2022. The amount rose from about $6.55 billion in 2018 to approximately $8.76 billion in 2022. The growth in invested capital was relatively steady, though the biggest increment occurred between 2020 and 2021. This suggests ongoing investments or capital reinvestments aligned with the company’s operational expansion.

Turnover of Capital (TO)

The turnover of capital ratio exhibited some variability but largely remained around 1.19 in 2018, 2019, and 2022, indicating consistency in how efficiently the company utilized its invested capital to generate sales during these years. However, there was a decline in the ratio in the years 2020 and 2021, dropping to 1.08 and then 1.05 respectively. This dip suggests a temporary decrease in capital efficiency during those years, which partially recovered by 2022 to the earlier level of efficiency.

Summary

Overall, the company experienced steady growth in both net sales and invested capital over the analyzed period. While invested capital increased to support expanding operations, the turnover of capital ratio's decline during 2020 and 2021 indicates a short-term reduction in capital efficiency, possibly due to challenges encountered in those years. By 2022, the turnover ratio rebounded to prior levels, reflecting a return to more effective use of capital alongside continued revenue growth.

Cash Operating Taxes

The cash operating taxes experienced fluctuations over the observed period, increasing from 233,444 thousand US$ in 2018 to a peak of 330,049 thousand US$ in 2021. In 2022, the figure decreased to 266,447 thousand US$, indicating variability in tax payments despite overall growth in pre-tax profitability.

Net Operating Profit Before Taxes (NOPBT)

There is a consistent upward trend in net operating profit before taxes, rising from 1,536,486 thousand US$ in 2018 to 2,088,315 thousand US$ in 2022. This demonstrates a progressive improvement in operating profitability, with significant year-over-year increases particularly notable between 2020 and 2022.

Effective Cash Tax Rate (CTR)

The effective cash tax rate exhibited variability during the period, starting at 15.19% in 2018 and reaching higher rates of 18.44% in 2019 and 17.1% in 2021. However, it declined notably to 12.76% by 2022. This decreasing trend in later years suggests improved tax efficiency or changes in tax regulation or strategy, which partially offsets the rise in taxable income.