Analysis of Reportable Segments
Hershey Co. operates in 3 segments: North America Confectionery; North America Salty Snacks; and International.
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Return on Equity (ROE) since 2005
- Aggregate Accruals
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Segment Profit Margin
Hershey Co., profit margin by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| North America Confectionery | |||||
| North America Salty Snacks | |||||
| International |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- North America Confectionery Profit Margin
- The profit margin for North America Confectionery exhibits a consistent upward trend over the period from 2019 through 2022. Starting at 31.11% in 2019, the margin increased moderately to 32.1% in 2020, followed by slight incremental rises to 32.23% in 2021 and reaching 32.93% in 2022. This gradual increase suggests steady improvement in profitability within this segment.
- North America Salty Snacks Profit Margin
- The profit margin for North America Salty Snacks demonstrates more variability during the observed years. It rose from 12.39% in 2019 to a notable 17.31% in 2020, indicating a significant improvement. This upward trend continued, albeit at a slower pace, reaching 18.14% in 2021. However, there was a decline in 2022, with the margin falling to 15.54%, indicating potential challenges in maintaining profitability in the most recent year.
- International Profit Margin
- The International segment shows a fluctuating pattern with some volatility. The margin was recorded at 6.64% in 2019 but dropped sharply to a negative value in 2020. Following this decline, the segment recovered, showing a profit margin of 10.11% in 2021 and further increasing to 12.65% in 2022. The recovery suggests effective measures were taken to improve profitability, although the negative margin in 2020 indicates there were significant difficulties during that year.
Segment Profit Margin: North America Confectionery
Hershey Co.; North America Confectionery; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment income (loss) | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment income (loss) ÷ Net sales
= 100 × ÷ =
The data reveals a positive trajectory in the financial performance of the North America Confectionery segment over the five-year period analyzed. There is an absence of data for 2018, with figures available starting from 2019 through 2022.
- Segment Income (Loss)
- The segment income shows a steady increase year over year from 2019 to 2022. Starting at approximately $2.12 billion in 2019, it rises incrementally to about $2.27 billion in 2020, $2.48 billion in 2021, and reaches $2.81 billion by the end of 2022. This upward trend indicates consistent growth in profitability within the segment.
- Net Sales
- Net sales exhibit a comparable increasing trend. Beginning at roughly $6.82 billion in 2019, sales incrementally grew each year, reaching approximately $7.08 billion in 2020, $7.68 billion in 2021, and peaking at around $8.54 billion in 2022. The consistent increases in net sales suggest expanding market demand or successful sales strategies.
- Segment Profit Margin
- The segment profit margin, expressed as a percentage, shows a gradual increase over the period examined. Starting at 31.11% in 2019, the margin rises steadily to 32.1% in 2020, slightly up to 32.23% in 2021, and reaching 32.93% by 2022. This improvement in profit margin suggests enhanced operational efficiency, better cost management, or pricing power within the segment.
Overall, the segment displays strong growth in income and sales, coupled with a rising profit margin. This pattern suggests effective management of both revenue generation and cost controls, contributing to enhanced financial strength over the reviewed years.
Segment Profit Margin: North America Salty Snacks
Hershey Co.; North America Salty Snacks; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment income (loss) | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment income (loss) ÷ Net sales
= 100 × ÷ =
- Net Sales
- Net sales for the segment showed a consistent upward trend over the periods examined, increasing from $410,005 thousand in 2019 to $1,029,405 thousand in 2022. This represents a substantial growth, particularly noticeable between 2021 and 2022, where the sales nearly doubled.
- Segment Income (Loss)
- Segment income also demonstrated growth throughout the years. Starting at $50,816 thousand in 2019, it rose steadily each year, reaching $159,935 thousand by 2022. This growth reflects an improvement in profitability that aligns with the increase in sales.
- Segment Profit Margin
- The segment profit margin showed some variability. It increased from 12.39% in 2019 to a peak of 18.14% in 2021, indicating improved efficiency or cost management during this period. However, in 2022, the margin declined to 15.54%, despite higher sales and segment income, suggesting that costs or pricing pressures might have affected profitability in that year.
- Summary of Trends
- Overall, the segment experienced robust growth in both sales and income from 2019 through 2022. While profitability as measured by segment profit margin improved up to 2021, the decrease in margin in 2022 indicates a possible shift in cost structure or competitive dynamics. The strong sales growth in 2022 did not fully translate to margin improvement, highlighting an area for potential operational focus.
Segment Profit Margin: International
Hershey Co.; International; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segment income (loss) | |||||
| Net sales | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segment income (loss) ÷ Net sales
= 100 × ÷ =
- Segment Income (Loss)
- The segment income displays a varied trajectory over the periods analyzed. Starting with no data for 2018, it records a positive income of 50,535 thousand USD in 2019, dips into a minimal loss (-14 thousand USD) in 2020, and subsequently recovers with significant growth in the following years—74,170 thousand USD in 2021 and 107,927 thousand USD in 2022. This indicates a resilient recovery and strong expansion in segment earnings post-2020.
- Net Sales
- Net sales demonstrate a fluctuating but overall upward trend from 2019 to 2022. After peaking at 761,136 thousand USD in 2019, sales declined to 626,635 thousand USD in 2020, corresponding possibly to broader economic or market challenges. However, sales rebounded to 733,497 thousand USD in 2021 and further increased to 853,409 thousand USD by 2022, indicating renewed growth and improving market conditions.
- Segment Profit Margin
- The profit margin follows a pattern consistent with income and sales trends. Absent for 2018, it stands at 6.64% in 2019, drops to break-even in 2020, then recovers to 10.11% in 2021 and further improves to 12.65% in 2022. This progression suggests increased operational efficiency or improved pricing power, contributing to higher profitability as the segment stabilizes and expands.
Net sales
Hershey Co., net sales by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| North America Confectionery | |||||
| North America Salty Snacks | |||||
| International | |||||
| Total |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- North America Confectionery Segment
-
The net sales for the North America Confectionery segment show a consistent upward trend from 2019 through 2022. Starting at approximately $6.8 billion in 2019, sales grew steadily each year to reach over $8.5 billion by 2022. This represents a notable increase, reflecting continuous growth in this segment over the period analyzed.
- North America Salty Snacks Segment
-
The North America Salty Snacks segment exhibits substantial growth over the observed years. Beginning with sales slightly above $410 million in 2019, there was a gradual increase to around $555 million in 2021, followed by a significant jump to over $1 billion in 2022. This sharp rise indicates a rapid expansion or increased market penetration in this segment during the final year.
- International Segment
-
The International segment experienced fluctuations in net sales. Sales decreased from approximately $761 million in 2019 to about $627 million in 2020, indicating a decline during that period. However, the segment rebounded in 2021 and 2022, with sales climbing back to around $853 million in 2022. This pattern suggests initial challenges followed by recovery and growth in international markets.
- Total Net Sales
-
Total net sales increased steadily from around $8 billion in 2019 to over $10.4 billion in 2022. This overall growth is primarily driven by the strong performance in the North America Confectionery and Salty Snacks segments, despite the initial dip experienced internationally. The upward trajectory in total net sales highlights a positive growth trend for the company across segments during the period under review.
Segment income (loss)
Hershey Co., segment income (loss) by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| North America Confectionery | |||||
| North America Salty Snacks | |||||
| International | |||||
| Total |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The segment income data over the years reveals several notable trends and changes across the reported segments.
- North America Confectionery
- This segment shows a consistent year-over-year increase in income. Starting from approximately 2.12 billion US dollars in 2019, the income rose to about 2.27 billion in 2020, then to roughly 2.48 billion in 2021, and finally reached approximately 2.81 billion in 2022. This steady growth indicates a strong and expanding market presence within North American confectionery products.
- North America Salty Snacks
- The income from this segment exhibits significant growth over the observed period. Beginning with approximately 50.8 million US dollars in 2019, the segment increased to about 75.8 million in 2020, followed by nearly 100.8 million in 2021, and then sharply rising to approximately 160 million in 2022. This rapid growth suggests increasing consumer demand or successful strategic initiatives in the salty snacks category within North America.
- International
- The international segment income presents a more volatile pattern. It started at roughly 50.5 million US dollars in 2019, declined sharply to a negative value around -14 thousand in 2020, then recovered to approximately 74.2 million in 2021, and further increased to about 107.9 million in 2022. This fluctuation may indicate challenges faced in international markets in 2020, but also shows a strong recovery and growth trend in subsequent years.
- Total Segment Income
- The total income from all segments combined shows consistent growth from about 2.22 billion US dollars in 2019 to 2.35 billion in 2020, 2.65 billion in 2021, and reaching nearly 3.08 billion in 2022. This steady upward trend reflects the overall positive performance driven primarily by robust increases in the North America Confectionery and Salty Snacks segments, alongside the recovery in the international segment.
In summary, the data indicates a healthy and growing segment income performance, with particularly strong growth in the North America Confectionery and Salty Snacks segments. The international segment experienced a setback in 2020 but demonstrated resilience with recovery in the following years. The total segment income growth confirms an overall strengthening financial position in the reported periods.