Cadbury confectionery sales rise 10 per cent

By Charlotte Eyre

- Last updated on GMT

Related tags: Cent, Stock market, London stock exchange, Cadbury schweppes

The Cadbury Schweppes drive to boost margins is full steam
ahead, boosted by the demerger of an underperforming drinks
arm, as the company today announced confectionery
revenues grew by ten per cent over the third quarter.

The company is currently focusing on a massive reorganisation, aiming to increase its share of the confectionery market while demerging its US beverages business. The company also announced today that it would list the beverages business on the New York Stock Exchange by issuing new shares to current stockholders. The confectionery division was particularly lucrative for the company this year, with all four regions - Britain, Ireland, the Middle East and Africa (BIMA), Europe, the Americas and Asia Pacific - experiencing revenue growth, Cadbury said. In the BIMA region sales increased 12 per cent, aided by an impressive 13 per cent rise in the UK, the company said. Business in Britain was boosted by increased market spend, Cadbury added, as well as "a strong recovery from the 2006 product recall and a cooler summer". ​In Europe and the Americas revenues increased by 10 per cent and 14 per cent respectively, helped in part by strong chewing gum sales in France, Spain, Russia and the US. Sales remained stagnant in Australia and New Zealand compared to the strong results in 2006, Cadbury reported. The company cited "continued challenges in the Australian retail market"​ as a factor.​However, overall sales in the Asia Pacific grew two per cent thanks to the emerging markets of India, where Bubbaloo bubblegum was launched in July, and Thailand, the company said. Todd Stitzer, Cadbury's chief executive officer, said the confectionery growth was in part due to the company's actions to increase its margins by four to six per cent per annum over the next few years. Cadbury has carried out massive changes to operations this summer, including downsizing central London offices, creating the new BIMA group, and switching jobs from the UK to Poland. ​Continuing these improvements over the 2008 - 2011 period, the company will reduce its workforce and manufacturing operations by 15 per cent, Stitzer said. "Furthermore, supply chain configuration benefits will reduce manufacturing costs from 2009 onwards,"​ he added. The plans to increase margins should lead to per annum growth of four to six per cent in the 2008 - 2011 period, as well as an "efficient" balance sheet, the company said. Cadbury Schweppes also announced today that the company has now decided to demerge the US beverages business, making a U-turn on earlier plans to sell the division. "On 27 July, we extended the timetable for the sale of ourAmericasBeverages business to allow bidders to complete their proposals against a more stable debt financing market,"​ the company said. "While the board continues to be committed to the principle of maximising shareowner value, it does not believe current market conditions will facilitate an acceptable sale process in the foreseeable future."​The company will list the business on the New York Stock Exchange (NYSE), and expects the demerger to be completed in the second quarter of the 2008 tax year. According to the International Herald Tribune, Cadbury shares were 2.75 per cent higher at 617 pence (€8.91) in early trading on the London Stock Exchange (LSE).

Related topics: Manufacturers, Mondeléz International

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