The Hershey Company (NYSE:HSY) reported a steep decline in annual earnings on Thursday, as a "historic" spike in cocoa prices and new import tariffs wiped out nearly $1.3 billion in reported net income over the past year.
The Pennsylvania-based chocolate giant saw its 2025 reported net income plummet 60% to $883.3 million.
The fourth quarter was particularly bruising, with net income falling to $320 million ($1.57 per share) despite a 7% increase in sales to $3.09 billion.
The disconnect between rising sales and falling profits highlights the extreme pressure on margins; Hershey’s adjusted gross margin contracted significantly as the company paid record-high prices for cocoa beans following poor harvests in West Africa.
However, the 2025 "medicine-taking" year appears to have set the stage for a dramatic 2026 rebound.
Hershey’s new 2026 guidance projects adjusted EPS climbing 30% to 35% (reaching $8.20–$8.52), as the company benefits from a retreat in commodity futures and the full realization of double-digit price hikes implemented last year.
The outlook also includes a 150-basis-point revenue tailwind from the 2025 acquisition of LesserEvil, a high-growth "better-for-you" snack brand that marks Hershey’s latest push to diversify beyond the confection aisle.