HERSHEY, Pa.--(BUSINESS WIRE)--The Hershey Company (NYSE:HSY) today announced the implementation of a new productivity initiative as part of its ongoing efforts to drive long-term growth and margin-enhancement. The company has identified opportunities to simplify its structure and improve ways of working in order to unlock growth potential in its core confection and emerging snacks businesses. These efforts are intended to ensure Hershey’s ability to rapidly anticipate and respond to the changing demands of the global consumer.
“We have taken a fresh look at how our resources and people are deployed globally and are better aligning our structure to the company’s long-term strategies and goals,” said John P. Bilbrey, Chairman, President and Chief Executive Officer, The Hershey Company. “This initiative is designed to unlock greater value across the organization by empowering decision-making closer to our customers and consumers, enabling a more enterprise-wide approach to innovation, swiftly advancing our knowledge agenda, and ensuring we effectively allocate resources to future growth areas. Removing cost and complexity from our business will make us more flexible to quickly react to changing consumer and competitive marketplace trends. We are confident these changes will extend our position as a global confectionery leader and create a Hershey that is even more innovative, entrepreneurial and better positioned to continue to deliver sustainable, profitable growth in an ever-changing marketplace for the long-term benefit of all of our stakeholders.”
Global Leadership Team
As part of this initiative, Hershey also announced changes to its Global Leadership Team to better deliver the company’s strategy, support its core business, and position Hershey to capitalize on adjacent and international growth opportunities.
Effective immediately, changes to the Global Leadership Team include:
- Patricia Little, Senior Vice President, Chief Financial Officer, will now also be responsible for corporate development, mergers and acquisitions. M&A will continue to be an important driver of Hershey’s future success.
- Steven Schiller, Regional President, AEMEA, has been named President, China and Asia. This new position elevates the company’s focus on its number one international growth priority, China.
- The company has created a new Global Leadership Team role focused on growth and expansion in emerging international markets including India and those in Latin and South America, the Middle East, Europe, and Africa. A candidate search including both internal and external individuals is in progress.
Productivity Initiative Impacts
The program is expected to generate pretax savings of $65 million to $75 million, primarily in 2016, of which a portion will be reinvested back into the company. Hershey anticipates that enabling further investment in brand-building and global capabilities should deliver future confectionery and snacks revenue and adjusted earnings per share-diluted growth that results in increased shareholder value.
The program is expected to result in the reduction of approximately 300 jobs by the end of 2015, with estimated pre-tax charges and costs of $100 million to $120 million, or $0.29 to $0.35 per share-diluted, the majority of which are cash and will be incurred in 2015. As part of the streamlining of the organization, the company will first offer a voluntary separation program and is committed to assisting all impacted employees during the transition. Manufacturing operations are not included in this effort as efficiencies were attained through previous productivity programs.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Many of these forward-looking statements can be identified by the use of words such as “intend,” “believe,” “expect,” “anticipate,” “should,” “planned,” “projected,” “estimated,” and “potential,” among others. These statements are made based upon current expectations that are subject to risk and uncertainty. Because actual results may differ materially from those contained in the forward-looking statements, you should not place undue reliance on the forward-looking statements when deciding whether to buy, sell or hold the company's securities. Factors that could cause results to differ materially include, but are not limited to: issues or concerns related to the quality and safety of our products, ingredients or packaging; changes in raw material and other costs; selling price increases, including volume declines associated with pricing elasticity; market demand for our new and existing products; increased marketplace competition; disruption to our manufacturing operations or supply chain; failure to successfully execute and integrate acquisitions, divestitures and joint ventures; changes in governmental laws and regulations, including taxes; political, economic, and/or financial market conditions; risks and uncertainties related to our international operations; disruptions, failures or security breaches of our information technology infrastructure; the impact of future developments related to civil antitrust lawsuits and the possible investigation by government regulators of alleged pricing practices by members of the confectionery industry in the United States; and such other matters as discussed in our Annual Report on Form 10-K for the year ended December 31, 2014. All information in this press release is as of June 19, 2015. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
