HERSHEY, PA.— Rising cocoa prices and implementing a computer software program negatively affected Hershey Co. financial results for the fourth quarter ended Dec. 31, 2023. Still, Hershey’s stock rose 4% on Feb. 8, the day results were announced.

In the full fiscal year, net income increased 14% to $1.86 billion, equal to $9.31 per share on the common stock, up from $1.64 billion, or $8.22 per share, in fiscal 2022. Net sales increased 7% to $11.16 billion from $10.42 billion.

Yet in the fourth quarter, net income fell 12% to $349 million, or $1.75 per share, from $396 million, or $1.98 per share, in the previous year’s fourth quarter. Net sales increased 0.2% to $2.66 billion from $2.65 billion, but organic constant currency net sales decreased 0.1%. In the quarter, net price realization of 6.5 points was offset by decreased volume and planned inventory declines within the North America Salty Snacks segment related to implementing an enterprise resource planning (ERP) computer software program.

In the current fiscal year, Hershey expects net sales growth of 2% to 3%, driven primarily by net price realization. Reported earnings per share are forecast to be flat in 2024. Hershey in the year expects higher cocoa and sugar costs and one-time expenses related to the ERP program.

“We operate in resilient categories, and we have a long history of successfully adapting to periods of rapid change and uncertainty,” said Michele G. Buck, chief executive officer of Hershey, in prepared comments issued Feb. 8. “This period of historically high cocoa and sugar prices, while challenging, is no different. While cocoa is expected to limit earnings growth this year, we believe our business strategies will enable us to grow our categories and profitably expand market share over time.”

In a Feb. 8 earnings call, she added, “So given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business.”

Hershey’s stock on the New York Stock Exchange closed at $202.31 per share on Feb. 8, which compared with a close of $194.26 per share on Feb. 7.

Hershey on Feb. 8 also announced efforts to increase agility, enhance automation and support a more efficient operating model. The efforts are expected to generate $300 million in pre-tax savings by 2026, including $100 million in 2024, according to the company. Additionally, Hershey expects to incur employee severance and related separation benefits of $45 million to $60 million in 2024 due to reducing its workforce and reallocating resources, according to a filing with the US Securities and Exchange Commission. No mention was made about the number of workers.

In the fourth quarter, the North America Salty Snacks segment had the biggest decline, falling 25% in net sales to $205 million. Volume decreased 26%. Skinny Pop ready-to-eat popcorn retail sales declined 12%, which reflected softness in the popcorn category and planned Hershey reductions in advertising and merchandising following the October ERP upgrade.

“We did start to see some pressure in the (popcorn) category related to value,” Buck said in the earnings call, adding Hershey has launched a bigger value-size pack of Skinny Pop.

In the fiscal year, net sales in North America Salty Snacks increased 6% to $1.09 billion.

Net sales within the North America Confectionery segment increased 7% to $9.12 billion in the fiscal year and 2.1% to $2.22 billion in the fourth quarter.

“Hershey chocolate retail sales growth outpaced the category in Q4, with solid measured channel growth of 2.9%, as category price elasticity continued to outperform broader food and improved in the fourth quarter,” Buck said in prepared comments. “Seasonal traditions were a key driver of this performance, with Hershey outpacing category growth in both Halloween and holiday.”