Hershey to raise prices 11%

Hershey Co. said Friday that it planned to raise prices on its products by an average of 11% as it tries to stem the effect of soaring commodities costs, and it trimmed its projections for 2008 and 2009.

The candy company known for its chocolate bars and bite-size Kisses said the immediate increase was necessary to offset “significant increases” in the cost of raw materials such as sugar, cocoa and peanuts -- up as much as 45% since the start of the year -- as well as the growing cost of fuel, utilities and transportation.

“Commodity costs have been volatile over the last several years and continue to remain at levels that are well above historical averages,” Hershey President and Chief Executive David J. West said.

The Hershey-based chocolatier said its commodities costs would grow by more than $110 million this year -- a figure that could double in 2009.

The company narrowed its 2008 earnings and revenue guidance because of the price hikes.

Hershey said it expected earnings per share of $1.43 to $1.51. Excluding business alignment and impairment charges, the company predicts its earnings will be $1.85 to $1.90. However, Hershey cautioned that because of current economic conditions, its profit was likely to fall at the low end of that range.

It expects sales to grow 3% to 4%.

Hershey shares fell $2.44, or 5.8%, to $39.20 in after-hours trading after closing up 43 cents at $41.62.