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Higher prices give Hershey lift

Candy giant enjoys rising sales, profits

HARRISBURG — Raising prices and streamlining its production lines helped Hershey to dramatically higher second-quarter sales and profit, the nation's largest candy maker said Wednesday, even as it absorbs spiraling commodity costs and puts new emphasis on marketing muscle.

The Hershey Co. said it earned $41.5 million, or 18 cents a share, for the three months ended June 29, compared with last year's second-quarter profit of $3.6 million, or a penny per share, as it spent heavily to transform its production lines.

Sales rose 5 percent to $1.1 billion, slightly above analyst estimates. They were boosted by a price increase and growth in some key brands, while Hershey reaffirmed its 2008 guidance of sales growth of 3 percent to 4 percent and earnings of $1.85 to $1.90 per share.

Shares of the Hershey, Pa.-based maker of Hershey's Kisses and Reese's jumped $1.90, or 5.4 percent, to $36.85 in trading Wednesday.

The upbeat report comes as Hershey works to pull out of two years of lackluster sales amid tougher competition, volatile dairy and cocoa prices, and a costly effort to shift production overseas to where populations are younger and growing faster.

Company President and Chief Executive David West said a new marketing plan, marked by a 30 percent increase in spending, is driving the company's better performance in the relatively slow-growing, but dominant U.S. candy market.

"We're not satisfied with where we are, but we're pleased that we're starting to get some traction," West said.

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