Moody's: Hershey outlook negative

Moody's Investors Service said it affirmed the A1 senior unsecured long-term and Prime-1 short-term ratings of the Hershey Co. and changed the outlook to negative.

The outlook reflects weakening credit metrics in recent quarters that are likely to come under additional pressure if commodity costs remain at current high levels while heavy competition persists in key confectionery categories, the agency said. In addition, the company is undergoing a major supply chain transformation that Moody's believes carries material execution risk.

Hershey's A1 rating is supported by its stable cash flows, operating margins in the high-teens, solid liquidity and dominant position in the U.S. chocolate confectionery market, Moody's said.

The ratings are constrained by the company's modest size relative to peers, limited product and geographic diversity and the highly competitive nature of the U.S. confectionery industry, the agency said.

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