LOS ANGELES  —  Hershey Foods Corp. (HSY), the largest U.S. chocolate maker, Tuesday affirmed its long-term goal of increasing diluted earnings per share by 9 to 11 percent a year.

The company, whose stock has ridden a wave of new products like Reese's (search) snack bars and Ice Breakers liquid breath mints to an all-time high, also stood by its long-term goal of posting organic net sales growth of between 3 and 4 percent annually.

But Hershey warned that its gross margin improvement would fall below its long-term growth target due to the ongoing integration of its recently acquired Mauna Loa (search) and Grupo Lorena (search) businesses. The company's stock fell 5 cents to $61.85 in after the bell trading Tuesday evening.

For 2005, Hershey expects net sales to increase between 6 and 7 percent including the impact of the Mauna Loa and Grupo Lorena acquisitions.

Diluted earnings per share on a pro-forma basis are expected to rise between 9 percent and 11 percent, excluding the 2004 tax provision adjustment.

It also forecast gross margin improvement in a range between the 40 basis points it achieved in 2004 and the lower end of its 70 basis point to 90 basis point long-term goal. The company has said it is developing new products using macadamia nuts to take advantage of the $112.4 million purchase of Mauna Loa.

Hershey's net income in 2004 was $2.30 per share, which included a 24-cents-per-share tax benefit.

Analysts on average forecast 46 cents a share for the first quarter and $2.32 a share 2005, according to Reuters Estimates.