Cadbury Annual Net Profit Drops 10%

Feb. 25, 2009
Revenue increase offset by costs related to demerger with U.S. soft drinks arm.

Cadbury, the British maker of confectionery, said Wednesday its net profit dropped 10% to 364 million pounds (US$529 million) in 2008, hit by restructuring costs. Cadbury, which makes Trident chewing gum, said it expected revenue growth in 2009 to be at the lower end of its forecast of 4% to 6% as a result of the global economic slowdown. The company said its 2008 net profit figure compared with income after tax of 405 million pounds in 2007. Revenue last year jumped almost 15% to 5.38 billion pounds but profit was dragged down by an increase in restructuring costs linked to Cadbury's demerger of its U.S. soft drinks unit American Beverages. During 2008, Cadbury saw sales of chocolate rise 6%, gum 10% and candy 6%. Cadbury also makes Halls throat sweets. "Whilst we will not be immune from the continued weak economic environment, at this early stage in 2009, we expect to deliver revenue growth around the lower end of our 4% to 6% goal range and to make good progress toward our goal of mid-teens margins by 2011," Cadbury's American chief executive Todd Stitzer said in the annual results statement. Cadbury last year completed the demerger of American Beverages. Prior to the split, Cadbury was known as Cadbury Schweppes. The U.S. business, which has been renamed Dr Pepper Snapple Group, is now listed on the New York Stock Exchange. "In 2008, Cadbury completed its transformation into a pure-play confectionery company," Stitzer said in Wednesday's statement. "Our strong revenue growth and significant improvement in operating margin demonstrate the relative resilience of our focused business model," he added. At the end of 2008, Cadbury agreed to sell its Australian drinks arm to Asahi Breweries of Japan for 550 million pounds. The deal could however be stopped by Coca-Cola, which has held a pre-emptive right of negotiation with Cadbury since it tried to purchase the business in 1999. Coca-Cola has until March 2009 to decide whether to make an alternative offer for the unit. Schweppes Australia is the second largest non-alcoholic ready-to-drink beverages business in Australia. Copyright Agence France-Presse, 2009

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