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Hershey Co. reported a fourth-quarter earnings beat before market open Thursday, although shares fell 2.5% in premarket trades, weighed down by weaker-than-expected sales and guidance.

The chocolate and salty snacks company reported net income of $349 million, or earnings of $1.70 a share, compared with net income of $396 million, or earnings of $1.92 a share, in the prior year’s quarter. Hershey’s
adjusted earnings were $2.02 a share, flat from the prior year’s quarter. Analysts surveyed by FactSet were looking for adjusted earnings of $1.95 a share.

Fourth-quarter sales were $2.66 billion, an increase of 0.2% on the same period last year. Analysts surveyed by FactSet were looking for sales of $2.72 billion.

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North America Confectionery sales increased 2.1% on the same period last year. North American salty snack sales fell 24.6% compared with the prior year’s quarter. Hershey said North American salty snack volume decreased 26.1%, reflecting an approximate 16-point headwind from planned inventory declines related to an Enterprise Resource Planning implementation in October 2023. Excluding the inventory impact, volume declined high-single-digits due to category softness within the ready-to-eat popcorn category, the company said.

For 2024, Hershey expects sales of $11.39 billion to $11.5 billion, or net sales growth of 2% to 3% from 2023 and adjusted earnings to be flat at $9.59 a share, when excluding one-time costs associated with the ERP implementation and incremental cost savings initiatives. Analysts surveyed by FactSet are looking for 2024 sales of $11.59 billion and adjusted earnings of $9.78 a share.

“The company’s initial FY24 guide was consistent with our below consensus estimates, affirming our concerns around the impact of unprecedented cocoa inflation as well as higher sugar on the bottom line,” said D.A. Davidson senior research analyst Brian Holland, in a note released Thursday. “We expect volumes to remain under pressure through at least 1H24 when HSY laps distribution & merchandising headwinds as well as increased competitive activity, though confectionery elasticities only figure to increase on more price.” D.A. Davidson maintained its neutral rating for Hershey.

Related: Hershey’s stock rallies after profit and sales beat expectations, boosted by higher prices and salty snacks strength

Of 27 analysts surveyed by FactSet, eight have an overweight or buy rating and 19 have a hold rating for Hershey.

On Thursday Hershey announced dividends of $1.370 on the company’s common stock and $1.245 on its class B common stock, an increase of 15%. The company’s stock has fallen 17.4% in the last 52 weeks, compared with the S&P 500 index’s
gain of 22.4%.

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