Hershey (HSY-NYSE) has announced a three-year restructuring plan which includes 1,500 job cuts, and it is cutting production lines.  It will outsource some low value-added items and build a production plant in Mexico.

It expects pre-tax charges and non-recurring project implementation costs of $525 to $575 million over the next three years.  $300 million of the charges will be recognized in 2007 and the rest in 2008.  Hershey estimates that its gross margin will improve and should have an annual savings of roughly $170 to $190 million by 2010.

How many candy makers will ask where the water comes from in making the candy?  HSY shares are up 2% at $52.40 on the news.

Jon C. Ogg
February 15, 2007