A Hershey's chocolate bar is shown in this photo illustration in Encinitas

Hershey raises annual profit forecast on higher prices, robust demand

(Reuters) -Hershey Co raised its full-year sales and earnings forecast on Thursday, as the Kit Kat maker expects to benefit from price hikes and strong demand for its chocolates and candies.

The company said demand in response to price increases was stronger than expected in the first quarter, but warned that it would slow later in the year as consumer buying power gets pressured by runway inflation and fewer government benefits.

Packaged food makers, including Hershey and peers Kraft Heinz and Campbell Soup Co, have been raising prices for their products to mitigate soaring costs stemming from supply chain disruptions, the Ukraine war and global inflation.

The Russia-Ukraine conflict’s effect on commodity prices and supply availability is impacting Hershey’s operations and financial outlook, said Chief Executive Officer Michele Buck.

The owner of Jolly Rancher and Candy Dish now expects higher-than-previously forecast inflation to pressure gross margins this year by an additional 60 to 80 basis points.

The candy maker now expects full-year 2022 net sales growth of between 10% and 12%, compared with its previous forecast of an 8% to 10% growth.

It forecasts annual adjusted profit of between $7.91 and $8.05 per share, up from prior forecast of $7.84 to $7.98 per share earlier.

Excluding items, the company earned $2.53 per share in the quarter ended April 3, above estimates of $2.10 per share, according to Refinitiv IBES data.

Revenue rose 16.1% to $2.67 billion, beating estimates of $2.48 billion.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Amy Caren Daniel)