AI Takeaway
Hershey (HSY) reported FY2025 revenue growth of 4.4% to $11.69B, but profitability collapsed as surging cocoa and input costs drove gross margin down nearly 14 percentage points to 33.5%, causing net income to plunge 60.2% to $883M.
Revenue
$11.69B
++4.38% YoY
Gross Margin
33.5%
-13.77% YoY
Operating Income
$1.44B
-50.26% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-K filing
HSY grew top-line revenue 4.4% YoY to $11.69B in FY2025, but this modest gain was entirely overshadowed by a 31.7% surge in Cost of Revenue to $7.77B, reflecting unprecedented cocoa commodity price inflation that compressed gross profit by 26.0% to $3.92B.
Source: Source: 10-K Income Statement
Gross margin fell sharply from 47.3% in the prior year to 33.5% in FY2025, a decline of approximately 13.8 percentage points. Operating margin similarly collapsed from 25.9% to 12.3%, reflecting the inability to fully pass through input cost increases to consumers via pricing.
Source: Source: 10-K Income Statement & Key Ratios
Net income dropped 60.2% YoY to $883M from $2.22B in the prior year, with net margin compressing to 7.6% from an implied ~19.8% previously, underscoring the magnitude of the cost shock on Hershey's bottom line.
Source: Source: 10-K Income Statement
2 more insights available
Upgrade to unlockThe 31.7% surge in Cost of Revenue to $7.77B in FY2025 is primarily attributable to historically elevated cocoa prices, which are a core input for Hershey's chocolate products. If cocoa prices remain elevated or rise further, Hershey's gross margin—already compressed to 33.5%—could deteriorate further, threatening profitability. The company's ability to hedge or pass through costs via pricing is limited by consumer price sensitivity.
Source: Source: 10-K Income Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $1.71 versus the $1.42 analyst consensus — a +20.6% beat for FY2025.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $11.69B | $11.2B | +4.38% |
Cost of Revenue | $7.77B | $5.9B | +31.66% |
Gross Profit | $3.92B | $5.3B | -26.00% |
Operating Income | $1.44B | $2.9B | -50.26% |
Net Income | $883.26M | $2.22B | -60.24% |
R&D Expense | $61.66M | $55.8M | +10.50% |
SG&A Expense | $2.46B | $2.37B | +3.66% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $13.74B | $12.95B | +6.14% |
Current Assets | $3.59B | $3.76B | -4.54% |
Total Liabilities | $9.1B | $8.23B | +10.60% |
Current Liabilities | $3.01B | $3.93B | -23.35% |
Stockholders' Equity | $4.64B | $4.71B | -1.65% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $2.28B | $2.53B | -10.04% |
Investing Cash Flow | $-1.28B | $-960.31M | -33.16% |
Financing Cash Flow | $-803.36M | $-1.3B | +38.04% |
Share Buybacks | $0 | $494.19M | -100.00% |
D&A | $503.7M | $455.25M | +10.64% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 33.5% | 47.3% | -13.77% |
Operating Margin | 12.3% | 25.9% | -13.54% |
Net Margin | 7.6% | — | — |
ROE | 19.0% | — | — |
ROA | 6.4% | — | — |
Current Ratio | $1.192 | — | — |
Debt to Equity | $1.964 | — | — |
Other companies in Packaged Foods & Meats
Hershey's net income fell 60.2% in FY2025 to $883M from $2.22B the prior year, driven by a massive 31.7% surge in Cost of Revenue to $7.77B due to elevated cocoa and input costs. Gross margin collapsed nearly 14 percentage points to 33.5%, meaning the company could not offset commodity inflation through pricing alone.
Yes, Hershey grew revenue 4.4% YoY to $11.69B in FY2025, reflecting some pricing and volume gains. However, this top-line growth was far outpaced by the 31.7% rise in production costs, resulting in significantly lower profitability despite higher sales.
The most critical risk is cocoa commodity price inflation, which drove Cost of Revenue up 31.7% and crushed gross margin to 33.5%. Additional risks include limited pricing power (consumers may trade down if prices rise further), elevated financial leverage with a debt-to-equity ratio of 1.96x, and the complete suspension of share buybacks as management preserves cash.
Hershey's near-term liquidity appears manageable with a current ratio of 1.19x and positive operating cash flow of $2.28B, but overall financial health has weakened. Total liabilities rose 10.6% to $9.10B and the debt-to-equity ratio increased to 1.96x, while net income dropped 60.2%, signaling meaningful pressure on the company's financial position.
No, Hershey did not repurchase any shares in FY2025, a complete reversal from the prior year when it spent $494M on buybacks. This suspension suggests management chose to conserve cash in response to the challenging cost environment and compressed earnings.