Analysis of Geographic Areas
Hershey Co. operates in 2 regions: United States and Other.
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- Income Statement
- Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Aggregate Accruals
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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 | |||||
| Other |
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).
- United States Asset Turnover
- Over the five-year period, the asset turnover ratio for the United States exhibited minor fluctuations while maintaining a generally stable trend. Starting at 3.92 in 2018, the ratio slightly decreased to 3.91 in 2019 and further declined to 3.84 in 2020. The downward trend continued into 2021, reaching 3.72, representing the lowest point in the observed span. However, a notable uptick occurred in 2022, with the ratio rising to 4.01, which is the highest value recorded in this timeframe.
- Other Geographic Areas Asset Turnover
- The asset turnover ratio for other geographic areas showed more variability compared to the United States. In 2018, the ratio was 2.72, increasing to 2.90 in 2019, indicating improved efficiency or asset utilization. However, a decline followed, with the ratio dropping to 2.46 in 2020 and further decreasing to 2.39 in 2021. In 2022, the ratio experienced a partial recovery to 2.61, though it did not reach the previous peak observed in 2019.
- Comparative Insights
- Throughout the period analyzed, the United States consistently demonstrated a higher asset turnover ratio than other geographic areas, indicating relatively better asset utilization in the domestic market. While both regions experienced declines around 2020 and 2021, likely impacted by external factors, the U.S. showed a stronger recovery in 2022. The partial recovery in the other regions suggests some improvement but less pronounced compared to the United States. These trends may reflect geographic differences in market conditions, operational efficiency, or investments in assets.
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 | |||||
| Long-lived assets | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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
= ÷ =
The analysis of the annual financial data for the United States geographic area reveals several notable trends over the five-year period from 2018 to 2022.
- Net Sales
- Net sales demonstrate a consistent upward trajectory throughout the period. Starting at approximately 6.54 billion USD in 2018, net sales increased steadily each year, reaching about 9.12 billion USD in 2022. This represents a substantial growth in revenue, highlighting the company’s strengthening market position and sales performance within the United States.
- Long-lived Assets
- Long-lived assets show a gradual increase as well, rising from roughly 1.67 billion USD in 2018 to approximately 2.27 billion USD in 2022. This upward trend suggests ongoing investments in physical assets and infrastructure, which could indicate efforts to support expanding operations or improve production capabilities in the geographic area.
- Area Asset Turnover
- The area asset turnover ratio, which measures sales generated per unit of long-lived assets, displayed a slight decline during the initial years, dropping from 3.92 in 2018 to 3.72 in 2021. However, there is a notable improvement in 2022, where the ratio rises to 4.01, surpassing the initial 2018 level. This pattern reflects a temporary decrease in efficiency or asset utilization that was later reversed, suggesting enhanced productivity or better asset management towards the end of the period.
In summary, the data indicates strong revenue growth supported by incremental investments in long-lived assets, with an overall improvement in asset utilization efficiency by the final year observed. The increase in net sales and asset base alongside recovering turnover ratio suggests a positive development in business performance within the United States during these years.
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 | |||||
| Long-lived assets | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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
= ÷ =
- Net Sales
- Net sales in the "Other" geographic area showed a generally stable trend with moderate fluctuations over the five-year period. Starting at approximately 1.26 billion US dollars in 2018, net sales slightly increased in 2019 but then declined notably in 2020, reaching around 1.11 billion US dollars. This decrease aligns with potential external factors impacting sales performance during that year. Subsequently, net sales gradually recovered in 2021 and experienced a significant increase in 2022, surpassing the initial 2018 level by reaching nearly 1.30 billion US dollars.
- Long-lived Assets
- The value of long-lived assets exhibited modest variation throughout the period. After an initial level of approximately 462 million US dollars in 2018, asset values decreased in 2019 to about 436 million US dollars. From that point onwards, there was a consistent upward trend, with asset values increasing each year to reach nearly 497 million US dollars by 2022. This steady increase after 2019 suggests ongoing investment or asset retention in the region.
- Area Asset Turnover Ratio
- The area asset turnover ratio, which measures the efficiency of asset usage to generate sales, followed a declining trend from 2018 to 2021. It started from 2.72 in 2018, peaked slightly at 2.90 in 2019, then decreased to 2.46 in 2020 and further to 2.39 in 2021. This downward movement indicates a decreasing efficiency in utilizing assets during this period. However, in 2022, the ratio improved to 2.61, suggesting a partial recovery in asset efficiency alongside the rebound in net sales.
- Summary
- Overall, the "Other" geographic area experienced a dip in net sales and asset efficiency around 2020, likely influenced by external challenges during that period. Despite this, the asset base saw a steady increase from 2019 onward, which may indicate strategic investments. By 2022, both net sales and asset turnover ratio showed signs of recovery, suggesting improved operational performance and better asset utilization in the region.
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 | |||||
| Other | |||||
| Total |
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).
- United States Net Sales
- The net sales in the United States exhibit a consistent upward trend throughout the five-year period. Starting at approximately 6.54 billion US dollars in 2018, sales increased modestly each year, reaching about 9.12 billion US dollars by 2022. The year-over-year growth accelerated notably between 2021 and 2022, indicating stronger market performance or increased demand during this period.
- Other Geographic Areas Net Sales
- Net sales in the Other geographic regions show less consistent growth compared to the United States. After remaining relatively stable around 1.25 billion US dollars in 2018 and 2019, sales declined in 2020 to approximately 1.11 billion US dollars. The following years saw a recovery, with incremental increases in 2021 and 2022, ultimately reaching nearly 1.30 billion US dollars. This pattern may reflect external factors impacting certain markets or slower recovery in these regions.
- Total Geographic Net Sales
- Total net sales across all geographic areas followed a steady growth trajectory, rising from roughly 7.79 billion US dollars in 2018 to just over 10.42 billion US dollars in 2022. The total sales trend closely mirrors the U.S. sales pattern given the latter's larger contribution. Despite a dip in Other regions during 2020, total sales managed to maintain growth, suggesting the strength of the U.S. market as a key driver.
- General Observations
- The overall data reveals sustained revenue growth over the five-year span, with the United States market playing a dominant role in increasing net sales. The temporary downturn observed in Other regions during 2020 may be attributed to specific regional challenges or macroeconomic conditions during that time. Recovery in these areas post-2020 indicates a rebound, although growth remains slower relative to the U.S. market. The increasing gap between U.S. and Other region sales underscores the U.S. as the primary sales engine for the company.
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 | |||||
| Other | |||||
| Total |
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).
- United States Long-Lived Assets
- The long-lived assets in the United States exhibit a consistent upward trend over the five-year period. Beginning at approximately $1.67 billion in 2018, the asset base grew steadily each year, reaching about $2.27 billion by the end of 2022. The growth appears to accelerate particularly after 2020, with a notable increase of roughly $260 million from 2020 to 2021 and a further increase of approximately $175 million from 2021 to 2022. This pattern indicates continued investment or asset accumulation within the United States during the period analyzed.
- Other Geographic Areas Long-Lived Assets
- The assets classified under ‘Other’ show a more stable pattern with less pronounced growth. Starting at around $462 million in 2018, there was a slight decline in 2019 and 2020, with values dipping to roughly $436 million and $449 million respectively. However, from 2020 onwards, a moderate upward trend is observed, reaching about $497 million in 2022. Overall, the changes in this category are comparatively modest, suggesting a more cautious or limited allocation of long-lived assets outside the United States.
- Total Long-Lived Assets
- The total long-lived assets demonstrate a steady and consistent increase mirrored by the trends in the United States and Other categories. Starting at approximately $2.13 billion in 2018, the total assets rose incrementally each year, culminating near $2.77 billion by the end of 2022. This total growth is primarily driven by the substantial increases within the United States, while the Other category contributes modestly to the overall rise.
- Overall Insights
- The data indicates a strategic emphasis on expansion or enhanced investment in the United States over the observed period, leading to significant asset growth in this region. The slower growth in Other regions may reflect varying levels of investment activity, regional strategic priorities, or differing market conditions. The consistent growth in total long-lived assets suggests an overall strengthening or enlargement of long-term asset capacity, which may support future operational capabilities and business growth.