Hershey To Reduce Global Workforce By Approx. 15%; Reaffirms 2017 Outlook

(RTTNews) - The Hershey Company (HSY) announced initiatives designed to drive continued net sales, operating profit and earnings per share-diluted growth. The company's "Margin for Growth" program is expected to generate about 22% to 23% adjusted operating profit margin by year end 2019. The "Margin for Growth" multiyear program is designed to improve overall operating profit margin through supply chain optimization, a streamlined operating model and reduced administrative expenses, with savings primarily being achieved in 2018 and 2019. The company estimates that implementation of the program will reduce its global workforce by approximately 15% driven primarily by its hourly headcount outside of the United States.

The company anticipates that the program will result in total cumulative pre-tax charges of $375 million to $425 million, including one-time employee separation benefits of $80 million to $100 million. The portion of non-cash program costs, included in the aforementioned total, are expected to be between $200 million to $225 million. Cash savings are expected to reach an annual run-rate of between $150 million to $175 million by year end 2019.

Hershey said, over the long term, the company expects annual constant currency net sales growth of 2% to 4%, driven primarily by its North America business. This update, versus the previous outlook, reflects changes in U.S. shopping habits and continued macroeconomic challenges impacting growth in international markets. Given the scale advantages of the company's North America business and the "Margin for Growth" related initiatives, the company expects to generate long-term adjusted earnings per share-diluted growth of 6% to 8%.

Hershey announced, in 2017, the company expects reported earnings per share-diluted of $3.19 to $3.45, including items impacting comparability of approximately $1.36 to $1.53 per share-diluted. Adjusted earnings per share-diluted is expected to increase 7% to 9% and be in the $4.72 to $4.81 range. Hershey reaffirmed its outlook for full-year 2017 net sales growth of about 2% to 3% percent, including a net benefit from acquisitions of about 0.5 points and unfavorable foreign currency exchange rates of about 0.25 points.