Is My Candy Bar Getting Smaller? Yes, A Chocolate Crisis Means Smaller, Pricier Hershey's
Portfolio Pulse from Neil Dennis
Cocoa prices have seen a significant fluctuation, hitting a record high before slumping 13% in three days, yet the market remains in short supply. This situation has impacted companies like Hershey Co, which expects flat earnings for 2024 due to higher raw materials costs. Similarly, Mondelez International Inc. and Nestle SA have seen their shares fall this month. The Consumer Staples Select Sector SPDR ETF has gained 12.6% since mid-October, indicating some resilience in the consumer staples sector despite the cocoa crisis.
February 29, 2024 | 2:20 pm
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NEGATIVE IMPACT
Hershey Co faces flat earnings for 2024 due to the cocoa crisis, with its shares falling 8% since its February earnings report.
The direct impact of the cocoa price surge on Hershey's raw material costs and the subsequent expectation of flat earnings for 2024 have negatively affected investor sentiment, leading to an 8% drop in its share price.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
NEGATIVE IMPACT
Mondelez International Inc. has seen its shares fall 5% this month, affected by the cocoa crisis.
As a major player in the chocolate industry, Mondelez is impacted by the rising costs of cocoa, leading to a 5% decrease in its share price this month.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
Nestle SA's shares are down 8% in February, indicating the broader impact of the cocoa crisis on chocolate manufacturers.
Nestle, owning major chocolate brands, faces similar challenges as Hershey and Mondelez due to the cocoa crisis, leading to an 8% drop in its share price.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
POSITIVE IMPACT
The Consumer Staples Select Sector SPDR ETF has gained 12.6% since mid-October, showing resilience amidst the cocoa crisis.
The XLP ETF's performance indicates that the consumer staples sector, more broadly, remains resilient despite specific challenges faced by the chocolate industry.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70