Hershey reports 24% increase in Q1 net income

US chocolate manufacturer Hershey has raised its full year outlook after net earnings for the first quarter of 2012 soared 24.06% to $198.65m year-on-year, driven by higher pricing and cost cutting actions.

Net sales for the quarter ended 1 April 2012 increased 10.7% to $1.73bn, compared to $1.56bn in the same period of 2011.

Hershey president and chief executive officer John P Bilbrey said that the strong results are due to the company’s strategy of disciplined investment in core brands in he US and key international markets.

Hershey, which generates most of its sales from the US, raised prices by 11% in the quarter, which offset the marginal dip of 0.5% in sales volume.

Bilbrey added that Easter sales were strong, but as the holiday fell on 8 April and the quarter ended on 1 April, the total impact of the sales were not reflected in the quarter.

For the full year, Hershey anticipates adjusted net earnings to increase 10%-12% on a 7%- 9% rise in sales and including the Brookside acquisition, which was completed in early 2012.

The candy maker had previously projected an adjusted net income growth of 9%-11% on a 6.5%-8.5% increase in net sales for the year.

In 2011, Hershey’s sales increased due to the successful launches of new products. The company intends to extend this strategy into 2012, and will introduce new products such as Rolo Minis, Ice Breakers Duos and Hershey’s Simple Pleasures in the current quarter.

Hershey also expects to raise its full-year advertising budget by double digits on a percentage basis, as it plans to continue its focus on developing brands in the US and core international markets in the wake of tough market conditions.