Hershey details strategy for continued growth

The company’s “Margin for Growth” program is intended to provide the flexibility and fuel to continue brand and capability investments that will help enable achievement of its vision, the company writes. The 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 anticipates that the program will result in total cumulative pre-tax charges of USD 375 m to USD 425 m, including one-time employee separation benefits of USD 80 m to USD 100 m. 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.

Cash savings are expected to reach an annual run-rate of between USD 150 m to USD 175 m by year end 2019.

Combined, these efforts should enable the company to achieve its adjusted operating profit margin target of about 22% to 23% by year end 2019. Hershey plans to continue to make investments to grow its core confectionery business and expand its breadth across the snackwheel by capturing new usage occasions and participating in on-trend categories.