Hershey Lowers 2003 Sales Outlook

Chocolate maker Hershey Foods Corp. (HSY) Friday boosted its 2003 earnings outlook to the top end of a prior range, but slightly lowered its sales outlook amid rising commodity costs and a sluggish overall economy.

The maker of Hershey's bars and Kisses said it sees 2003 per-share earnings growing at the top end of its October forecast range of 9 percent to 11 percent, as it rolls out new products such as Reese's Fast Break candy bar and pushes into new distribution channels such as convenience and club stores.

Hershey said it sees 2003 sales growing between 2 percent and 3 percent, Chairman and Chief Executive Richard Lenny told investors in a presentation at the company's headquarters in Hershey, Pennsylvania.

The company, which has been posting flat shipment growth, had previously forecast sales growing 3 percent to 4 percent.

Lenny told investors that Hershey, which has been pushing toward higher-margin products and eliminating unprofitable items from its line, will work to turn around its gum and non-chocolate businesses, whose performance has lagged its competitors.

Shares of the largest U.S. chocolate maker were down 8 cents at $66.16 Friday morning on the New York Stock Exchange, after earlier dropping as low as $64.90.

Analysts had forecast Hershey to earn $3.36 to $3.58 a share in 2003, with an average at $3.45 a share, according to analysts polled by Thomson First Call. In the full 2002 year, the company is forecast to earn $3.16 a share on average, First Call said.

Late Thursday, the company announced a much-anticipated share repurchase program of up to $500 million in the next 12 months.

Earlier in the week, Hershey and Mars' U.S. candy division announced wholesale price increases of 10 percent or more on their regular-sized chocolate bars, driven by the rising cost of cocoa and other commodities.

Hershey's controlling trust in September pulled the company off the auction block after strong opposition from the local community and state officials.