Jan. 27 (Bloomberg) -- Hershey Co., the largest U.S. chocolate maker, posted fourth-quarter profit that beat analysts’ estimates as price increases and higher advertising spending boosted revenue.

Net income rose 51 percent to $82.2 million, or 36 cents a share, from $54.3 million, or 24 cents, a year earlier, the Hershey, Pennsylvania-based company said today in a statement. Revenue climbed 2.6 percent to $1.38 billion. Hershey gained the most in three months in New York trading.

The maker of Reese’s Pieces and Jolly Ranchers responded to a rise in cocoa costs with a 10 percent price increase in August. The company also boosted its ad spending 26 percent last year to lure and retain customers during a time of increasing unemployment and declining consumer spending in the U.S.

“They have reinvested in marketing their core brands and they are seeing some benefit from that,” Edgar Roesch, an analyst at Soleil Securities Corp. in New York, said in a telephone interview yesterday. He advises holding the shares.

Hershey plans “much higher” ad spending in 2009, Chief Financial Officer Humberto Alfonso said on a call with investors and analysts.

Profit from operations was 59 cents a share, beating the average estimate of 54 cents in a Bloomberg survey of analysts.

The company said it had $79.7 million, or 23 cents a share, of pretax expenses in the quarter from supply-chain improvements and a writedown in the value of its Mauna Loa trademark.

India, China

The company plans to expand in India, China and Brazil, Chief Executive Officer David West said on the call.

The chocolate maker reiterated its 2009 sales-growth forecast of as much as 3 percent, and said operating profit would grow more slowly than the “long-term” target of 6 percent to 8 percent.

Hershey climbed $2.38, or 6.8 percent, to $37.48 in New York Stock Exchange composite trading, the largest gain since Oct. 28. The shares declined 12 percent last year, their fourth straight annual drop.

Cocoa futures traded on ICE Futures U.S. in New York surged 31 percent in 2008, including a 4.2 percent gain in the fourth quarter. Raw sugar gained 9.1 percent in 2008, even with a 14 percent drop in the last three months of the year.

To contact the reporter on this story: Matt Townsend in New York mtownsend8@bloomberg.net.

Last Updated: January 27, 2009 16:18 EST