Cadbury earnings down on divestments

by Eric Schroeder
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LONDON — Net earnings at Cadbury P.L.C. in the year ended Dec. 31, 2008, fell 10% to €366 million ($466 million) from €407 million, due in large part to the company’s disposal of its beverage units in North America and Australia. The company incurred a charge of €194 million related to restructuring costs during fiscal 2008, including a loss of €60 million related to the disposal of Americas Beverages. This compared with €165 million in charges during 2007. Meanwhile, earnings from continuing operations, which consists of the company’s chocolate, chewing gum and candy business, rose 148% to €370 million ($471 million) from €149 million.

Net sales in the year were €5,384 million ($6,862 million), up 15% from €4,699 million in fiscal 2007. Cadbury said sales growth was strong in emerging markets such as India (up 23%), South Africa (up 20%) and South America (up 18%), but was more mixed in developed markets such as the United States, the United Kingdom, Europe and Australia.

With an increased focus on fewer, bigger initiatives, Cadbury said sales in its 13 focus brands grew by 8% with its three largest brands — Cadbury Dairy Milk, Trident and Halls — growing by 11%, 11% and 9%, respectively.

"In 2008, Cadbury completed its transformation into a pure-play confectionery company," said Todd Stitzer, chief executive officer. "Our strong revenue growth and significant improvement in operating margin demonstrate the relative resilience of our focused business model.

"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."

In its Americas business, Cadbury posted underlying profit from operations of €315 million, up 35% from €234 million in fiscal 2007. Sales rose to €1,631 million from €1,372 million.

"Our business in the Americas delivered another year of strong overall performance, underpinned by continued strong growth for gum, good growth for candy and a robust performance from chocolate following the launch of Green & Black’s in the United States," Cadbury said.

The company said growth in Stride and Trident gums was partially offset by modest declines for Dentyne, while strong growth in candy was driven by Halls, Sour Patch Kids and Swedish Fish.

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