Published on : Aug 11, 2015
The multinational food products company, Hershey, has invested in Chinese food industry, which has gone utterly wrong. Hershey has posted a net loss of US$99.94 million for the Q2 that ended on July 5, 2015.
The company had reported a net income in the same period of time in the previous year at US$168.17 million or 78 cent per share on the common stock. The results are inclusive of an impairment charge of US$249.8 million for the Shanghai Golden Monkey business of Hershey that has performed far below expectations.
The net sales for this quarter showed a negligible rise, reported at US$1,578.82 million against the net sales of US$1,578.35 million in the previous year. The company stated that its net sales witnessed a rise of 1.3%, excluding the unfavorable foreign currency translation. In 2014, Hershey had acquired majority stake totaling to 80% in Shanghai Golden Monkey. The company has paid around US$394 million for this acquision and will acquire the rest 20% stake in Sept 2015.
The product portfolio of the company includes Golden Monkey chocolates, candies, protein-based products, and snacks. These products are supplied to local stores and retail shops across China. Hershey had expected China to become its second biggest market by the end of 2015 at the time of the acquisition.
Mr. J.P. Bilbrey, the Chairman, President, and the CEO of Hershey, stated during an earning call with analysts, on Aug 07 that as they have indicated previously, they procured the Golden Monkey business to widen their footprint in the country by leveraging both the regional and local network of distributors and the sales force in order to diversify the growth of Hershey’s chocolate market that has been limited to tier-one hypermarkets, historically.