HARRISBURG, Pa. - A price increase and streamlined production lines helped Hershey to a dramatically higher second-quarter sales and profit, the company said Wednesday, as America's largest candy maker absorbs spiralling commodity costs and puts new emphasis on marketing muscle.

The Hershey Co. said it earned $41.5 million, or 18 cents a share, for the three months ended June 29, compared with last year's second-quarter gain of $3.6 million, or a penny per share, as it spent heavily to transform its production lines.

Sales rose five per cent to $1.1 billion, slightly above analyst estimates. The figure was boosted by a price increase and growth in some key brands, while Hershey reaffirmed its 2008 guidance of sales growth of three to four per cent and earnings of $1.85 to $1.90 per share.

Shares rose 80 cents, or 2.3 per cent, to $35.75 in morning trading.

The news lifted Hershey's beleaguered shares in morning trading by 60 cents, or 1.7 per cent, to 35.55.

The upbeat report from Hershey comes as the company works to pull out of two years of lacklustre sales amid toughening competition, volatile dairy and cocoa prices, and a costly effort to shift production overseas to where populations are younger and growing faster.

Company president and chief executive David West said a recently unveiled marketing plan, marked by a 30 per cent increase in spending, is driving an improved performance in the relatively slow-growing, but dominant U.S. candy market.

"We're not satisfied with where we are, but we're pleased that we're starting to get some traction," West told analysts on a conference call.

Hershey's recent market share losses are flattening out, its high-end Bliss bar is the best-selling new product in the chocolate sector and the company is getting bang for its new marketing bucks, West said.

Discounting pretax charges of $39.3 million, or 11 cents a share, the Hershey, Pa.-based maker of Hershey's Kisses and Reese's said it would have earned nearly $67 million, or 29 cents a share.

Based on those numbers, analysts surveyed by Thomson Financial expected 28 cents per share. Still, after discounting pretax charges, Hershey earned more in last year's second quarter, $81.7 million or 35 cents a share.

In January, Hershey boosted wholesale prices by 13 per cent on about one-third of its domestic candy line, including many of its biggest-selling products.

Hershey is also in the process of closing six U.S. and Canadian plants and cutting more than 3,000 jobs, while it looks to a new plant in Mexico and joint ventures in India, China and Brazil to capitalize on booming growth in those countries.

For the first six months of 2008, Hershey gained $104.7 million, or 46 cents a share, not including pretax charges, compared with $97 million, or 42 cents a share, in the first half of 2007. Sales rose 2.8 per cent in the six-month period to $2.27 billion.

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