Hershey

Hershey’s fourth-quarter revenue missed Wall Street estimates as its business in China continued to struggle, but the bottom line got a boost from low cocoa prices and cost cuts.

The chocolatier reported that net sales rose 3.2% to $1.97 billion but analysts on average had expected $1.99 billion. North America sales, which account for about 85% of total sales, rose 3.8% to $1.69 billion but international sales fell 0.5% to $280.1 million

“China net sales were slightly below our forecast due to challenges in modern trade that persist given the current macroeconomic environment,” Hershey said in a news release.

As Reuters reports, Hershey “has struggled to increase its business in the world’s most populous country since an acquisition of local chocolatier Shanghai Golden Monkey in 2014 went awry.” For the fourth quarter, China sales fell 16.6% and chocolate category sales dropped 4%, matching the declines of the previous two quarters.

Shopping for chocolate in China has largely moved online, hurting Hershey’s investments in brick-and-mortar outlets such as supermarkets and hypermarkets, Berenberg analyst Fintan Ryan told Reuters.

Hershey’s net income fell to $116.9 million, or 55 cents per share, in the quarter, from $227.9 million, or $1.04 per share, a year earlier. But excluding certain items, the company earned $1.17 per share, handily beating analysts’ average estimate of $1.08.

Hershey benefited as the price of cocoa fell about 22% to a near four-year low in the quarter. CEO John P. Bilbrey also noted that cost-cutting initiatives “resulted in lower selling, marketing and administrative expenses versus our forecast.”

“These initiatives … enabled us to deliver additional operating income growth earlier than planned resulting in 2016 earnings per share-diluted ahead of our forecast,” he added.

For 2017, the company is now expecting adjusted earnings of $4.72-$4.81 per share, beating analysts’ average estimate of $4.64.

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