Analysis of Geographic Areas
Hershey Co. operates in 2 regions: United States and Other.
Area Asset Turnover
Hershey Co., asset turnover by geographic area
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| United States | 4.01 | 3.72 | 3.84 | 3.91 | 3.92 |
| Other | 2.61 | 2.39 | 2.46 | 2.90 | 2.72 |
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 asset turnover ratios across geographic segments demonstrate a consistent disparity in operational efficiency, with the domestic market significantly outperforming international operations throughout the observed five-year period. Both regions experienced a period of contraction between 2019 and 2021, followed by a synchronized recovery in 2022.
- United States Asset Turnover
- The domestic market maintained a high level of efficiency, beginning at 3.92 in 2018. A gradual decline was observed over the subsequent three years, with the ratio reaching a period low of 3.72 in 2021. This trend reversed sharply in 2022, as the ratio climbed to 4.01, representing the peak efficiency level for the analyzed timeframe.
- Other Geographic Areas Asset Turnover
- International operations exhibited greater volatility and lower overall asset utilization compared to the US. Following an initial increase from 2.72 in 2018 to 2.90 in 2019, a steady decline occurred, bringing the ratio down to 2.39 by 2021. A recovery was recorded in 2022, with the ratio improving to 2.61, although it remained below the 2019 peak.
- Comparative Regional Analysis
- A persistent gap in asset utilization efficiency exists between the two segments, with the United States consistently generating more revenue per unit of asset. The simultaneous dip in ratios during 2020 and 2021 across both geographic areas suggests the influence of broader systemic factors, while the mutual recovery in 2022 indicates a widespread improvement in operational throughput or revenue generation across all markets.
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Area Asset Turnover: United States
Hershey Co.; United States; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 9,121,166) | 7,807,606) | 7,042,804) | 6,722,617) | 6,535,675) |
| Long-lived assets | 2,272,811) | 2,099,786) | 1,836,114) | 1,717,606) | 1,668,186) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 4.01 | 3.72 | 3.84 | 3.91 | 3.92 |
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).
1 2022 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 9,121,166 ÷ 2,272,811 = 4.01
The financial performance in the United States area is characterized by consistent growth in both revenue and the long-lived asset base. From 2018 to 2022, net sales increased from US$ 6,535,675 thousand to US$ 9,121,166 thousand, while long-lived assets expanded from US$ 1,668,186 thousand to US$ 2,272,811 thousand.
- Net Sales Trend
- A consistent upward trajectory is observed in net sales, with the most significant year-over-year increase occurring between 2021 and 2022.
- Asset Accumulation
- Long-lived assets grew steadily each year, indicating a continuous commitment to infrastructure or capacity expansion within the region.
- Asset Turnover Efficiency
- The area asset turnover ratio exhibited a gradual decline from 3.92 in 2018 to 3.72 in 2021, suggesting that the growth in the asset base slightly outpaced sales growth during this period. This trend reversed sharply in 2022, with the ratio reaching a period high of 4.01, reflecting a marked improvement in operational efficiency and a stronger conversion of assets into revenue.
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Area Asset Turnover: Other
Hershey Co.; Other; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Net sales | 1,298,128) | 1,163,731) | 1,106,915) | 1,263,635) | 1,255,394) |
| Long-lived assets | 496,891) | 486,401) | 449,141) | 435,533) | 462,108) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 2.61 | 2.39 | 2.46 | 2.90 | 2.72 |
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).
1 2022 Calculation
Area asset turnover = Net sales ÷ Long-lived assets
= 1,298,128 ÷ 496,891 = 2.61
The financial performance for the designated geographic area exhibits volatility in asset utilization and revenue generation between 2018 and 2022. While net sales and long-lived assets both ended the period higher than their initial 2018 levels, the efficiency of asset deployment, as measured by the area asset turnover ratio, fluctuated significantly.
- Net Sales Performance
- Revenue levels remained relatively stable between 2018 and 2019, followed by a notable contraction in 2020, where net sales fell to approximately 1.11 billion US dollars. A steady recovery followed, with sales increasing in 2021 and reaching a five-year peak of approximately 1.30 billion US dollars by December 31, 2022.
- Long-lived Assets Trend
- The asset base saw an initial reduction in 2019, decreasing from 462.1 million US dollars to 435.5 million US dollars. However, from 2020 onward, a consistent upward trend is observed, with long-lived assets growing annually to reach 496.9 million US dollars by the end of 2022, indicating a period of sustained capital investment.
- Area Asset Turnover Analysis
- The asset turnover ratio peaked in 2019 at 2.90, driven by the simultaneous occurrence of stable sales and a reduced asset base. A downward trend followed, with the ratio reaching its lowest point of 2.39 in 2021. This decline was the result of the 2020 sales contraction coupled with an expanding asset base. By 2022, the ratio recovered to 2.61, reflecting a stronger alignment between revenue growth and the increased investment in long-lived assets.
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Net sales
Hershey Co., net sales by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| United States | 9,121,166) | 7,807,606) | 7,042,804) | 6,722,617) | 6,535,675) |
| Other | 1,298,128) | 1,163,731) | 1,106,915) | 1,263,635) | 1,255,394) |
| Total | 10,419,294) | 8,971,337) | 8,149,719) | 7,986,252) | 7,791,069) |
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).
Total net sales exhibited a consistent upward trajectory between 2018 and 2022, increasing from approximately $7.79 billion to $10.42 billion. This growth was characterized by modest gains in the early part of the period, followed by a significant acceleration in revenue expansion during 2021 and 2022.
- Domestic Market Performance
- Net sales within the United States served as the primary catalyst for overall growth. Revenue in this region rose from $6.54 billion in 2018 to $9.12 billion in 2022. The growth rate accelerated markedly toward the end of the period, with the largest single-year increase occurring between 2021 and 2022, where sales grew by approximately $1.31 billion.
- International Market Performance
- The "Other" geographic segment demonstrated higher volatility and slower growth compared to the domestic market. After a slight increase in 2019, net sales experienced a contraction in 2020, falling to $1.11 billion. A recovery phase followed, with sales increasing to $1.30 billion by 2022, eventually exceeding the 2018 baseline.
- Geographic Revenue Concentration
- A trend of increasing reliance on the United States market is observable. The domestic segment's contribution to total net sales grew from approximately 83.9% in 2018 to approximately 87.5% in 2022. This indicates that the overall revenue acceleration was driven almost exclusively by domestic expansion rather than international diversification.
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Long-lived assets
Hershey Co., long-lived assets by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| United States | 2,272,811) | 2,099,786) | 1,836,114) | 1,717,606) | 1,668,186) |
| Other | 496,891) | 486,401) | 449,141) | 435,533) | 462,108) |
| Total | 2,769,702) | 2,586,187) | 2,285,255) | 2,153,139) | 2,130,294) |
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).
Total long-lived assets experienced a consistent upward trend between 2018 and 2022, increasing from 2,130,294 thousand US dollars to 2,769,702 thousand US dollars. This overall growth is primarily driven by domestic expansion, as assets located in the United States grew at a significantly faster rate than those in other geographic regions.
- United States Asset Growth
- Domestic long-lived assets exhibited a steady increase from 1,668,186 thousand US dollars in 2018 to 2,272,811 thousand US dollars by the end of 2022. The most substantial year-over-year growth occurred between 2020 and 2021, where assets increased by approximately 263,672 thousand US dollars, suggesting a period of intensified domestic capital investment.
- Non-US Asset Performance
- Assets categorized as "Other" remained relatively stagnant over the analyzed period. Following a decline from 462,108 thousand US dollars in 2018 to 435,533 thousand US dollars in 2019, the segment saw a modest recovery, reaching 496,891 thousand US dollars in 2022. The growth rate for international assets was minimal compared to the domestic trajectory.
- Geographic Asset Concentration
- A shift toward higher geographic concentration in the United States is observable. In 2018, US-based assets represented approximately 78.3% of the total long-lived asset base. By 2022, this proportion increased to approximately 82.1%, indicating a strategic prioritization of domestic infrastructure and asset acquisition over international expansion.
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