A confectionery and snack maker whose chocolate bars, Reese's cups, and Hershey's Kisses sit in candy aisles worldwide, alongside SkinnyPop and Dot's pretzels. Founder Milton Hershey — bankrupt in two earlier cities before hitting it big with caramel — pivoted to chocolate after seeing German machinery at the 1893 Chicago World's Fair, then built the town of Hershey, Pennsylvania, around his factory. Hershey's Kisses, from 1907, may be named for the smooching sound of the chocolate-dropping machines.
Q2 2026 gross margin expanded 14.9 points to 45.3% as cocoa costs eased and hedges turned favorable
recovered to 45.3% after a year below 40%. rose 6.6% to $2,787.3M and rose 629.7% to $457.7M as favorable pricing, AAA Initiative savings, and $117.4M in favorable hedge marks reversed the 2025 cocoa-driven squeeze. The margin repair holds while cocoa futures sit at a 51% lower average, but International remains a loss.
Key takeaways
expanded 14.9 points to 45.3% from 30.5% a year earlier, driven by favorable net price realization, Advancing Agility & Automation Initiative savings, and $117.4M in favorable activity on commodity hedges.
rose 629.7% to $457.7M and rose 233.3% to $642.6M versus Q2 2025, as the margin recovery more than offset an 8% volume decline.
rose 6.6% to $2,787.3M, with 12% favorable price realization and a 3% benefit from the LesserEvil acquisition offsetting the volume drop.
Section summaries
Management's Discussion and Analysis
Q2 2026 net income surged 630% to $457.7M as gross margin expanded 1,490 bps on favorable pricing and lower commodity costs.
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Consolidated rose 6.6% to $2,787.3M, driven by 12% favorable and a 3% benefit from the LesserEvil acquisition, partially offset by an 8% volume decline.
North America Confectionery grew 40.1% on 14% price realization, while North America Salty Snacks segment income fell 5.9% on higher logistics costs and lower net pricing.
International swung to a $5.1M loss from $19.8M income a year earlier, pressured by higher commodity and manufacturing costs and increased advertising.
for the first six months rose to $888.1M from $508.9M a year earlier, driven by higher and favorable prepaid timing; was $4,685.0M, down 9.5% .
What changed
Q2 2026 of 45.3% reversed the decline flagged after FY2025's 33.5% level; cocoa futures averaged $1.80/lb in H1 2026, down 51% from the 2025 average, confirming the stabilization watch item.
LesserEvil integration proceeded as the Q1 2026 acquisition benefit (3% in Q2) built on the November 2025 close, lifting North America Salty Snacks sales but fell 5.9% versus the Q1 18.1% drop.
International did not recover: it swung to a $5.1M Q2 loss after the $15.3M Q1 figure and $3.3M FY2025 base, so commodity and manufacturing costs have not eased as earlier filings watched.
Advancing Agility & Automation Initiative produced savings that contributed to the Q2 margin gain, addressing the prior watch on realized savings beyond the 2024–2025 realignment charges.
Q2 2026 of $2,787.3M was down 10.2% from Q1 2026's $3,104.2M, the first sequential decline after Q1's 10.6% rise, as the LesserEvil benefit and pricing annualized.
What to watch
Q3 2026 to see if the 45.3% level holds as cocoa futures reflect hedging lags at the $1.80/lb H1 average
International result in Q3 2026 after the $5.1M Q2 loss to see if commodity and manufacturing costs ease
North America Salty Snacks trend after the 5.9% Q2 decline as LesserEvil volumes build and logistics costs settle
Full-year 2026 against the $425M–$475M guide and effect on
expanded to 45.3% from 30.5%, primarily due to favorable net , AAA Initiative savings, and $117.4M in favorable on commodity hedges.
North America Confectionery income grew 40.1% on 14% , while North America Salty Snacks segment income fell 5.9% due to higher logistics costs and lower net pricing.
International swung to a $5.1M loss from $19.8M income a year ago, pressured by higher commodity and manufacturing costs and increased advertising investment.
rose to $888.1M for the first six months, driven by higher and favorable timing of prepaid expenses, while financing activities used $828.1M mainly for share repurchases and dividends.
Quantitative and Qualitative Disclosures About Market Risk
Hershey reports minimal interest rate risk on operations, manages FX and commodity exposures with derivatives, and notes a 51% decline in average cocoa futures.
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A hypothetical 100 rate increase would have changed by $2.7M in H1 2026, with net cash of $370M at quarter-end.
Fixed-rate fair value would decrease by ~$233M given a 100 rate rise, but no operational impact is expected as there are no plans.
A 10% adverse FX rate move could reduce the fair value of foreign currency forward contracts by $23.9M, generally offset by transactional exposures.
Commodity derivative fell to $504.1M from $973.1M at year-end 2025; a 10% price decrease would lower net by $48.2M.
Average cocoa futures price dropped 51% to $1.80/lb in H1 2026, with a supply surplus forecast for the 2025–2026 season, though company costs reflect hedging lags.
When evaluating an investment in our Common Stock, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report on Form 10-K (the "2025 Form 10-K") and the information contained in th…
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When evaluating an investment in our Common Stock, investors should consider carefully, among other things, the risk factors previously disclosed in Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report on Form 10-K (the "2025 Form 10-K") and the information contained in this Quarterly Report on Form 10-Q and our other reports and registration statements filed with the SEC.