Hershey Financial Model
Food Company Financials Example (Free Excel Download)
The Hershey Company is a global confectionery and snacking leader, manufacturing and selling chocolate, sweets, mints, and salty snacks.
professionals from Deloitte
Used by professionals from
About this model
This model evaluates the equity valuation and earnings power of The Hershey Company, specifically assessing how the company's pricing power and cost-saving initiatives can offset the severe margin compression caused by historically high cocoa prices and shifting consumer demand elasticities.
- What the company does: The Hershey Company is a global confectionery and snacking leader, manufacturing and selling chocolate, sweets, mints, and salty snacks.
- Business segments:
- North America Confectionery (~81% of revenue)
- North America Salty Snacks (~10% of revenue)
- International (~9% of revenue)
- Key geographies: The vast majority of revenue is generated in the United States, with international operations focused on Mexico, EMEA, and India.
- Business model type: Asset-heavy, traditional consumer packaged goods (CPG) manufacturing and distribution model.
- Competitive position: Hershey holds the #1 market share position in U.S. chocolate and a leading position in U.S. total confection, competing primarily with Mars, Mondelez, and Ferrero.
- Recent major events: A massive surge in global cocoa prices in 2024/2025 severely impacting gross margins; the acquisition of Sour Strips (2024); completion of a major ERP implementation (2023/2024); and the ongoing "Triple A" transformation programme aimed at generating $900 million in cost savings between 2023 and 2026.
The downloadable Hershey financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsHershey financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $8.97B | $10.42B | $11.16B | $11.20B | $11.69B |
| Gross profit | $4.05B | $4.50B | $5.00B | $5.30B | $3.92B |
| Operating income | $2.04B | $2.26B | $2.56B | $2.90B | $1.44B |
| Net income | $1.48B | $1.64B | $1.86B | $2.22B | $883.3M |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
See 8 moreSee less
How to build a detailed financial model for Hershey
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
North America Confectionery
- Segment name: North America Confectionery
- Revenue driver formula: `Prior Year Segment Revenue x (1 + Volume Growth % + Price/Mix %)`
- Historical growth rate: 3-6% CAGR (heavily price-driven in recent years).
- Key growth levers and headwinds: Seasonal strength (Halloween, Holiday, Easter), everyday sweets portfolio expansion, and value-channel growth. Headwinds include price elasticity (volume declines as prices rise) and consumer trade-down.
- Pricing dynamics: Highly dependent on list price increases to offset commodity inflation. Hershey announced significant pricing actions in August 2024.
- Revenue recognition notes: Recognised upon transfer of control to customers (typically upon delivery). Trade promotions, slotting fees, and discounts are recorded as a reduction to revenue.
- Seasonality: Q3 and Q4 are historically strong due to Halloween and Holiday shipments; Q1 is driven by Easter (timing of Easter can shift sales between Q1 and Q2).
North America Salty Snacks
- Segment name: North America Salty Snacks
- Revenue driver formula: `Prior Year Segment Revenue x (1 + Volume Growth % + Price/Mix %)`
- Historical growth rate: 10-15% CAGR (boosted by acquisitions like Dot's Pretzels and Pretzels Inc.).
- Key growth levers and headwinds: Increased household penetration for SkinnyPop and Dot's Pretzels, capacity expansions. Headwinds include broader snacking category slowdowns.
- Pricing dynamics: Competitive promotional environment in the salty snack aisle.
- Revenue recognition notes: Standard CPG recognition, net of trade promotions.
- Seasonality: Relatively stable throughout the year compared to confectionery, with slight upticks around major sporting events (e.g., Super Bowl).
International
- Segment name: International
- Revenue driver formula: `Prior Year Segment Revenue x (1 + Organic Volume Growth % + Price/Mix % + FX Impact %)`
- Historical growth rate: 5-10% CAGR.
- Key growth levers and headwinds: Double-digit growth in Mexico and EMEA, high single-digit growth in India. Headwinds include foreign currency translation and local macroeconomic volatility.
- Pricing dynamics: Localised pricing strategies to manage currency devaluation and local inflation.
- Revenue recognition notes: Standard CPG recognition.
- Seasonality: Varies by region, but generally aligns with local holiday calendars.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Raw materials (cocoa, sugar, dairy, peanuts), packaging, direct manufacturing labour, overhead, and freight/logistics.
- Gross margin range: Historically 43-45% (Adjusted), but facing severe contraction (guidance of 650-700 bps contraction in 2025 due to cocoa prices).
- Key input costs and commodity exposures: Cocoa is the single largest exposure, followed by sugar and dairy. The company uses forward contracts and derivatives to hedge, but sustained high prices eventually flow through the P&L.
- How COGS scales with revenue: Generally linear with volume, but currently distorted by massive commodity inflation that outpaces price realisation.
Operating Expenses
- R&D: Minimal as a % of revenue (typically <1%), focused on product innovation and packaging.
- SG&A: Typically 18-20% of revenue. Includes advertising and related consumer marketing (historically 7-9% of sales), selling, and administrative expenses.
- Depreciation & Amortisation: Typically 2.5-3.5% of revenue, driven by heavy manufacturing footprint and amortisation of acquired intangibles.
- Stock-Based Compensation: ~0.5% of revenue.
- Restructuring / one-time charges: Frequent adjustments for business realignment (e.g., the "Triple A" programme) and acquisition integration costs.
Margin Profile
- Gross margin: 43-45% historically, dropping to ~37-38% in 2025.
- Operating margin: 22-23% historically, compressing in the near term.
- Net margin: 14-16% historically.
- Margin trend: Compressing significantly in 2025 due to historically high cocoa prices, sugar inflation, and incremental labour costs, partially offset by the Triple A productivity programme.
Balance Sheet Structure
- Total assets: ~$11.5 billion.
- Key asset categories: Property, Plant & Equipment (manufacturing facilities), Goodwill, and Other Intangibles (from acquisitions like Amplify and Dot's).
- Goodwill & intangibles: ~40-45% of total assets, reflecting a history of bolt-on acquisitions in the snacking space.
- Working capital profile:
- Days Sales Outstanding (DSO): 25-30 days.
- Days Inventory Outstanding (DIO): 60-75 days (elevated recently due to strategic stockpiling of raw materials and ERP transitions).
- Days Payable Outstanding (DPO): 50-60 days.
- Net working capital as % of revenue: Typically slightly positive to flat.
- Is working capital positive or negative? Generally positive. Inventory management is a critical use of cash during commodity price spikes.
- PP&E: ~$3.5 billion. Consists of manufacturing plants, distribution centres, and equipment. Useful lives: Buildings (20-40 years), Machinery (3-15 years).
- Right-of-use assets / operating leases: Material but manageable, typically ~$300-$400 million, primarily for warehousing and office space.
Capital Expenditure & Investment
- Capex as % of revenue: Historically 4-5.5% ($605 million in 2024, guiding down to $425-$450 million in 2025).
- Maintenance capex vs. growth capex: Roughly 40% maintenance, 60% growth/efficiency (e.g., new chocolate making facility in Hershey, ERP software capitalisation).
- Major capex programmes underway or planned: ERP implementation (largely complete) and domestic capacity expansion for core chocolate and salty snacks.
- Capitalised software / development costs: Material due to the recent multi-year ERP system implementation.
- M&A pattern: Bolt-on acquirer focused on high-growth snacking brands (e.g., Sour Strips in 2024, Dot's Pretzels, SkinnyPop).
Debt & Capital Structure
- Total debt: ~$4.5 billion - $5.0 billion.
- Debt/EBITDA ratio: ~1.5x - 2.0x (conservative leverage profile).
- Credit rating: A- (S&P) / A1 (Moody's).
- Key debt instruments: Senior unsecured notes, commercial paper programme, and revolving credit facilities.
- Maturity profile: Well-laddered with a mix of short-term commercial paper and long-term bonds extending out 10-30 years.
- Interest rate profile: Predominantly fixed-rate bonds, with floating exposure on commercial paper. Weighted average cost of debt is ~3.5-4.5%.
- Share repurchase programme: Active but opportunistic. $500 million authorisation in Dec 2023, with $470 million remaining as of year-end 2024 (paused in Q4 2024).
- Dividend policy: Consistent dividend grower. Target payout ratio is typically around 50% of adjusted earnings.
Cash Flow Characteristics
- Operating cash flow conversion: Consistently >1.0x of Net Income.
- Free cash flow margin: 12-15% historically, though pressured in 2024/2025 by high capex and inventory costs.
- Major non-cash items: Depreciation & amortisation, stock-based compensation, and mark-to-market losses/gains on commodity derivatives.
- Working capital cash flow impact: Inventory builds (especially cocoa) have been a material use of cash recently.
- Capex intensity: Moderate (returning to ~4% of sales in 2025).
- Cash tax rate vs. GAAP effective tax rate: Cash taxes generally track the effective tax rate, which is guided to 14-15% for 2025 (benefiting from tax credits and incentives).
Sheet Structure
- Assumptions: Hardcoded drivers for macroeconomic factors, segment growth, pricing, commodity inflation, and capital allocation.
- Income Statement: Consolidated P&L mirroring the 10-K, ending in both GAAP and Adjusted Net Income.
- Revenue & Margin Build: Detailed schedules for North America Confectionery, North America Salty Snacks, and International, calculating Volume, Price/Mix, and Segment Income.
- Balance Sheet: Standard US GAAP balance sheet with detailed working capital and intangibles lines.
- Cash Flow Statement: Indirect method, starting from Net Income, detailing working capital changes, capex, dividends, and debt issuance/repayment.
- Working Capital Schedule: DSO, DIO, DPO calculations driving the balance sheet and cash flow statement.
- PP&E & Intangibles Schedule: Capex, depreciation, software capitalisation, and amortisation roll-forwards.
- Debt & Interest Schedule: Tranche-by-tranche debt roll-forward, commercial paper balances, and interest expense calculation.
- DCF Valuation: Unlevered free cash flow calculation, WACC assumptions, terminal value, and implied share price.
Key Financial Relationships
- `North America Confectionery Revenue = Prior Year NA Confectionery Revenue * (1 + NA Confectionery Volume Growth + NA Confectionery Price/Mix)`
- `North America Salty Snacks Revenue = Prior Year NA Salty Snacks Revenue * (1 + NA Salty Snacks Volume Growth + NA Salty Snacks Price/Mix)`
- `International Revenue = Prior Year International Revenue * (1 + International Volume Growth + International Price/Mix + FX Impact)`
- `Consolidated Net Sales = NA Confectionery Revenue + NA Salty Snacks Revenue + International Revenue`
- `Cost of Sales = Consolidated Net Sales * (1 - Gross Margin %)` *(Note: Gross margin must be dynamically linked to commodity inflation assumptions).*
- `Selling, Marketing and Administrative (SM&A) = Consolidated Net Sales * SM&A % of Sales`
- `Segment Income = Segment Revenue * Segment Margin %`
- `Adjusted Operating Profit = Consolidated Net Sales - Cost of Sales - SM&A - Depreciation & Amortisation + Transformation Programme Savings`
- `Interest Expense = Average Total Debt * Weighted Average Interest Rate`
- `Ending Inventory = (Cost of Sales / 365) * Days Inventory Outstanding (DIO)`
- `Dividends Paid = Prior Year Adjusted EPS * Target Payout Ratio * Shares Outstanding`
- `Free Cash Flow = Cash from Operations - Capital Additions (including software)`
Cross-Sheet Dependencies
- Revenue & Margin Build feeds the top line and segment profit on the Income Statement.
- Income Statement generates Net Income, which is the starting point for the Cash Flow Statement.
- Working Capital Schedule uses Revenue and COGS from the Income Statement to calculate balances for the Balance Sheet, and the period-over-period changes feed the Cash Flow Statement.
- PP&E & Intangibles Schedule calculates D&A, which feeds the Income Statement (operating expenses) and Cash Flow Statement (non-cash add-back), while ending balances go to the Balance Sheet.
- Debt & Interest Schedule uses cash flow deficits/surpluses from the Cash Flow Statement to determine revolver/commercial paper drawdowns, updating debt on the Balance Sheet and calculating interest expense for the Income Statement. This creates a circular reference that must be managed with an interest circuit breaker.
Sign Convention
- Income Statement: Revenue is positive. Expenses (COGS, SG&A, Interest, Taxes) are entered as positive numbers but subtracted in subtotal formulas (e.g., `Gross Profit = Revenue - COGS`).
- Balance Sheet: All assets, liabilities, and equity balances are positive.
- Cash Flow Statement: Cash inflows (e.g., Net Income, D&A, increase in payables, debt issuance) are positive. Cash outflows (e.g., increase in inventory, capex, dividends, debt repayment) are negative.
- Growth Rates & Margins: Positive percentages indicate growth or profit; negative percentages indicate contraction or loss.
Things Most Likely to Go Wrong
- Gross Margin Disconnect: Failing to model the massive 650-700 bps gross margin contraction guided for 2025 due to cocoa prices will render the model entirely inaccurate.
- GAAP vs. Adjusted Metrics: Hershey heavily relies on Adjusted Gross Margin and Adjusted EPS. The model must clearly bridge GAAP to Adjusted by excluding mark-to-market commodity derivative losses and business realignment costs.
- Easter Timing Shifts: Easter shifts between Q1 and Q2. If building a quarterly model, failing to adjust for this will create false YoY growth signals.
- ERP Implementation Laps: Q4 2023 and Q1 2024 had significant inventory builds and drawdowns related to an ERP launch. Historical volume growth rates in these quarters are distorted and should not be straight-lined.
- Price Elasticity: Assuming volume remains flat while pushing 4-5% price increases is unrealistic. The model must link price increases to volume declines (elasticity).
- Software Capitalisation: Hershey capitalises significant software costs (ERP). Ensure these are captured in Capex and amortised properly, not expensed immediately in SG&A.
- Interest Circularity: Debt balances drive interest expense, which lowers net income, which lowers cash, which requires more debt. Ensure a toggle is built to break this circularity.
- Share Count Drift: Hershey frequently repurchases shares to offset dilution from stock-based compensation. Ensure the share count does not artificially inflate if buybacks are paused.
Validation Checks
- "Consolidated Net Sales growth should be >= 2.0% for 2025 based on management guidance; flag if below."
- "Adjusted Gross Margin must drop to ~37.5-38.5% in 2025 (reflecting the 650-700 bps contraction from 2024's 44.8%); flag if >40%."
- "Capex should be between $425M and $450M in 2025; flag if outside this range."
- "Adjusted Effective Tax Rate should be 14.0% - 15.0%; flag if outside this band."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
- "Debt/EBITDA should remain below 2.5x; flag if leverage exceeds this threshold."
- "Dividend payout ratio should remain between 45-55% of Adjusted Net Income."
- "Triple A programme savings should add exactly $125M to operating profit in 2025."
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| NA Confectionery Price/Mix Growth | 3.5 | % | Reflects carryover pricing from Aug 2024 and planned 2025 increases |
| NA Confectionery Volume Growth | -1.5 | % | Reflects expected price elasticity and slight consumer trade-down |
| NA Salty Snacks Revenue Growth | 5.0 | % | Normalisation after 2024 ERP lap distortions, driven by SkinnyPop/Dot's |
| International Revenue Growth | 4.0 | % | Continued strength in Mexico/EMEA offset by FX headwinds |
| Adjusted Gross Margin (2025) | 38.0 | % | Reflects guided 650-700 bps contraction from 2024 due to peak cocoa costs |
| SM&A as % of Sales | 18.5 | % | Historical average, balancing brand investment with Triple A cost savings |
| Triple A Incremental Savings (2025) | 125.0 | $M | Direct management guidance for 2025 cost structure improvement |
| Days Sales Outstanding (DSO) | 28 | Days | Historical average based on recent balance sheets |
| Days Inventory Outstanding (DIO) | 70 | Days | Elevated to reflect higher raw material costs and strategic stockpiling |
| Days Payable Outstanding (DPO) | 55 | Days | Historical average |
| Capital Expenditures (2025) | 435.0 | $M | Midpoint of management guidance ($425M - $450M) |
| Adjusted Effective Tax Rate | 14.5 | % | Midpoint of management guidance (14% - 15%) |
| Weighted Average Interest Rate | 4.2 | % | Based on current debt stack and commercial paper rates |
| Dividend per Share Growth | 5.0 | % | Conservative growth reflecting margin pressure but commitment to payout |
| Share Repurchases (2025) | 0.0 | $M | Assumed paused in near-term to preserve cash amid cocoa crisis |
| WACC | 7.5 | % | Standard consumer staples discount rate |
| Terminal Growth Rate | 2.0 | % | Long-term GDP / inflation alignment |
Data Sources & Benchmarks
- Filings: SEC EDGAR (The Hershey Company 10-K, 8-K earnings releases).
- Investor Relations: The Hershey Company IR website (earnings presentations, prepared remarks transcripts).
- Key Peers for Benchmarking: Mondelez International (MDLZ), Mars (private, but useful for category data), Kellanova (K), General Mills (GIS), Tootsie Roll Industries (TR).
- Industry Data Sources: NielsenIQ / IRI (for U.S. retail takeaway data, market share in candy/mint/gum), ICCO (International Cocoa Organization) for global cocoa spot and futures pricing.
- Consensus Estimates: FactSet or Bloomberg for forward EPS and revenue estimates.
Sources
- The Hershey Company Q4 2024 Earnings Release (February 6, 2025)
- The Hershey Company Q4 2024 Earnings Call Prepared Remarks (February 5, 2025)
- The Hershey Company 2024 Annual Report on Form 10-K (Filed February 2025)
- Historical SEC Filings (FY2021 - FY2023) for trend analysis and segment reporting structures.
Do more with the Hershey model
Frequently asked
What is The Hershey Company's primary business?+
The Hershey Company is a global leader in confectionery and snacking, manufacturing and selling a wide range of chocolate, sweets, mints, and salty snacks. Its business is primarily focused on the North American market, holding the number one market share in U.S. chocolate.
What are the main revenue segments for The Hershey Company?+
The Hershey Company generates the vast majority of its revenue from North America Confectionery, accounting for approximately 81% of total sales. North America Salty Snacks contributes about 10%, with the remaining 9% coming from International operations.
What is a key capital expenditure assumption in The Hershey Company's financial model?+
The financial model assumes Capex as a percentage of revenue at 0.0536, reflecting the company's asset-heavy manufacturing and distribution model. This includes investments in manufacturing plants, distribution centers, and equipment, with a mix of maintenance and growth-oriented spending.
What factors are considered in the working capital profile for Hershey's valuation?+
The working capital profile for Hershey considers Days Sales Outstanding (DSO) of 25-30 days, Days Inventory Outstanding (DIO) of 60-75 days, and Days Payable Outstanding (DPO) of 50-60 days. Net working capital is generally positive, with inventory management being a critical use of cash during commodity price spikes.
Can I download an Excel financial model for The Hershey Company?+
Yes, an Excel financial model for The Hershey Company is available for download. This general corporate model provides a forecast horizon from FY2026 to FY2030, allowing users to analyze the company's future financial performance.
What is Hershey's competitive position in the market?+
Hershey holds the number one market share position in U.S. chocolate and a leading position in U.S. total confection. The company competes primarily with major players like Mars, Mondelez, and Ferrero in the global confectionery and snacking market.
Have more financial modelling questions? Contact us
Created by ex-finance professionals
Hey, I’m Alex and I created Finamodel.
Over my years in the finance industry I kept building the same models over and over again. Same structure, same assumptions, different logo. So I started building frameworks to turn them into clean, reusable templates.
Every model here is one I’d actually use for a client, and I personally vet each one before it goes up.
I’m not an expert in every industry, but I’ve built enough models to know what belongs in one. And when something is completely foreign to me, I reach out to my network for experts to work on our models with us.
Having a template library on hand cuts a first build from hours to minutes.
Need help finding your model? You’ll find me in the Finamodel app!
Other Food Company Financial Models
Browse another company in the same sector.
Archer Daniels Midland
Archer Daniels Midland is a global leader in human and animal nutrition and one of the world's premier agricultural origination and processing companies.
Bunge Global
Bunge Global SA is a premier global agribusiness and food company that connects farmers to consumers by sourcing, processing, and distributing agricultural commodities.
Conagra Brands
Conagra Brands is one of North America's leading branded food companies, manufacturing and selling a wide variety of shelf-stable, refrigerated, and frozen packaged foods.
Campbell's
The Campbell's Company (formerly Campbell Soup Company) is a leading North American manufacturer and marketer of branded convenience food and beverage products.
General Mills
General Mills is a leading global manufacturer and marketer of branded consumer foods and pet products.
Hormel Foods
Hormel Foods is a global branded food company that manufactures and markets high-quality, protein-centric products including fresh meats, frozen items, and shelf-stable foods.
Kraft Heinz
The Kraft Heinz Company is one of the largest global food and beverage companies, manufacturing and marketing products such as condiments, sauces, cheese, meals, and coffee.
Mondelez International
Mondelez International is a global snacking leader that manufactures and markets biscuits, chocolate, gum, candy, and various cheese and grocery products.
Explore more Consumer financial model templates.
