Today we're going to look at three global giants in the food products manufacturing sector; specifically chocolate, cereal, snacks and meat. Add a beer stock to the mix and we'd have all the important food groups covered.
Sweet growth, sweet profits, sweet dividends
The Hershey Company (NYSE:HSY), practically synonymous with chocolate, manufactures and distributes candy, mints and gum under brand names we all know, such as The Hershey Company (NYSE:HSY)'s, Reese's and Kit Kat. The company's global reach includes marketing in 70 countries.
The Hershey Company (NYSE:HSY)'s second quarter results were definitely a treat for investors. Net sales were up 6.7% compared to the similar quarter of 2012. Net income soared 17.6% to nearly $160 million. Net income as a percentage of revenue rose a full 1 percent.
The company reported that its U.S. market share rose in every channel, resulting in a total market share increase of 1.4%. Gross margin percentage showed outstanding improvement, up 3.9% year-over-year. Lower commodity costs, the payoff from cost savings initiatives, and fixed costs being spread over a large sales volume all contributed to The Hershey Company (NYSE:HSY)'s margin improvement.
The Hershey Company (NYSE:HSY) announced a 15% increase in the quarterly dividend to $0.485 per common share. Jim Cramer of CNBC's "Mad Money" program made an odd comment about Hershey and its dividends, saying that investment "pros" (whoever they might be) may not value avid dividend payers like Hershey as highly now that interest rates have been rising, which makes dividend yields look less enticing.
In my view, The Hershey Company (NYSE:HSY) isn't a boring utility company -- it's growing at a very nice clip. The dividends are just the frosting on the delicious earnings confection this company whips up.
By no means a flaky or corny investment
Kellogg Company (NYSE:K) is the world's largest cereal company and ranks second in the production of cookies and crackers. Kellogg Company (NYSE:K)'s beloved brands -- beloved by both consumers and the company's shareholders -- include Special K, Frosted Flakes and Rice Krispies. In 2012 it made a strategic acquisition of Pringles, the potato chip snack company.
Second quarter revenues for Kellogg were up 6.9% over the same quarter of 2012, to $3.7 billion. Net income rose 8.6%.
Net sales rose in all segments and regions of Kellogg Company (NYSE:K)'s global marketing operations -- with the exception of U.S. Morning foods, which declined 3%. Operating profit rose in all segments, including U.S. Morning foods, except in the Latin American region.
Nothing fowl about this company's performance
Tyson Foods, Inc. (NYSE:TSN) describes itself as "a diversified multi-protein business." It produces a wide range of chicken, beef and pork products, including bacon and deli meats. The company markets its products in 130 countries.
I liked the positive attitude in their second quarter press release headline: "Chicken Surges to Record Earnings and Beef Rebounds." I felt like shouting: "Way to go, Chickens!"
Sales for the fiscal third quarter reached a record level of $8.7 billion. The chicken segment accounted for $3.2 billion, or 36% of the total. Chicken revenues rose an impressive 10.6% compared to the same quarter of 2012. The increase was due to both higher volume, up 4.4%, and higher prices, up 6%. Beef, Tyson Foods, Inc. (NYSE:TSN)'s largest segment, achieved revenues of $3.7 billion in the quarter, up nearly 7% on a 3.8% increase in volume and 2.9% higher prices.
Tyson Foods, Inc. (NYSE:TSN)' operational efficiency shows up in its gross profit, which rose to 7.8% of sales compared to 6.9% of sales in 2012. That's the number that tells the story of the company's performance. SG&A expenses are a tiny 3% of sales.
Operating income rose more than 22% to $419 million. The chicken segment accounted for $220 million of this, and beef was $114 million.