Hershey’s net income drops 60% as cocoa costs devour price increases

Hershey’s net income plunged 59.9% to US$320 million in the fourth quarter, extending a damaging year for the chocolate maker as soaring cocoa and tariff costs overwhelmed successive price increases. 

Full-year net income fell 60.3%, with adjusted earnings per share down 32.7% to US$6.31. Sales rose 7% to US$3.09 billion in Q4, comfortably beating analyst forecasts, but the widening gap between revenue growth and collapsing profitability defines these results. 

Prices up, volumes down

Hershey raised prices aggressively to offset input costs, raising prices by roughly 10% across its North America confectionery segment in Q4. Volume fell about 5 points as consumers cut back, and segment margins shrank 520 basis points to 29.1%. The company’s overall operating margin dropped from 32.5% to 14.4%.

Innova Market Insights data from January suggests US consumers aren’t deliberately eating less chocolate — they’re responding to higher shelf prices and could return if costs ease. Confection was the third-fastest-growing US snacking category in 2025, behind only nutritional bars and meat snacks. 

Salty snacks 

The salty snacks segment delivered a different dynamic. Sales surged 28% to US$357 million, driven by 14 points of volume growth. The November 2025 acquisition of better-for-you brand LesserEvil added roughly 10% to segment growth.

Excluding LesserEvil, Hershey’s US salty snack retail sales still grew 15.6% in the 12 weeks to December 28, gaining nearly 45 basis points of market share. The segment’s strength reinforces the company’s shift away from cocoa-dependent products at a time when that exposure is proving costly.

The 2026 outlook

As we reported in January, cocoa prices dropped more than 10% year-on-year in early 2026, settling around US$5,400–US$6,000 per ton on improved West African harvest forecasts. Analysts expect surpluses from the 2025/26 and 2026/27 seasons, though one poor weather event could reverse that.

Hershey’s 2026 guidance projects 4–5% sales growth and adjusted EPS of US$8.20–US$8.52 — a 30–35% increase. CEO Kirk Tanner says the company enters the year with “strong conviction in the momentum of our business.”

That projection follows a year in which Hershey’s own February 2025 warning of “significant pressure” on earnings proved accurate. Adjusted EPS fell from US$9.37 to US$6.31 — a US$3.06-per-share decline over 12 months.

Broader picture

Internationally, there was little relief. Sales were flat at US$255.6 million, and the segment recorded a US$31.6 million loss — a US$61.1 million deterioration year-on-year. The incoming EU Deforestation Regulation, which requires full supply chain traceability for cocoa back to the land of origin, will add further compliance costs for companies sourcing from West Africa.

Whether falling cocoa prices and salty snacks momentum can restore Hershey’s margins is the key question for 2026. For now, these results capture a confectionery industry earning more in revenue and less in profit — a situation that price increases alone have not resolved.