HARRISBURG, Pa. — The Hershey Co., the nation's largest candymaker, said yesterday its third-quarter profits tumbled 66 percent as it spent heavily to streamline its operations and struggled with aggressive competition and slackening sales.

Just two weeks after its chairman and chief executive announced he will leave, Hershey also slashed its 2007 forecast — the third such setback this year as the company struggles to recover from a year-long slump. Its shares fell more than 3 percent in afternoon trading.

The owner of Hawai'i-based Mauna Loa Macadamia Nut Corp. said it earned $62.8 million, or 27 cents a share, in the three months ending Sept. 30, versus a profit of $185 million, or 78 cents per share, in the same period a year earlier. The Hershey, Pa.-based company also makes Hershey's Kisses and Reese's candy.

Not counting costs to close six North American plants and shift more production to Mexico and contractors, Hershey said it would have earned $157.2 million, or 68 cents per share.

Third-quarter sales fell 1 percent to $1.4 billion from almost $1.42 billion a year ago. Its shares fell $1.40 to $42.89 in afternoon trading yesterday after falling to a 52-week low of $42.27.

Hershey is in the midst of trying to revive sales of its core candy lines while marketing new high-margin gourmet and dark chocolate products. However, it is being hurt by higher dairy costs and the need to spend more on promotions to fend off what analysts say is a strong challenge from competitor Mars Inc.

"Throughout 2007, our top priority has been to restore momentum within the U.S.," chairman and chief executive Richard Lenny said in a statement. "Against a backdrop of severe commodity cost pressures and strong competitive activity, we're maintaining this focus." The company blamed the slowdown in part on distributors having difficulty getting credit to buy Hershey's new products while they try to whittle down inventories.