Cadbury results put pressure back on Kraft

Posted by Daniel Palmer on 22nd October 2009

A strong third quarter result from UK confectioner Cadbury has placed pressure on Kraft to raise their non-binding offer, but doubts remain about the likelihood of a considerably higher bid given the lack of other bidders.

Cadbury reported a seven per cent incline in revenue for the third quarter, with chocolate (7%) and candy (11%) growth outpacing that of their gum (4%) division.The result brings year-to-date growth up to five per cent, above forecasts.

Strong performances in Britain & Ireland (up 10%) and emerging markets (South America up 18%, Asia and Middle East and Africa up 14%) were behind the robust result.

“We have great momentum in our business and our confectionery strategy continues to yield benefits beyond expectations,” Todd Stitzer, Cadbury’s CEO said. “In the third quarter we have delivered growth in every category and every business. At the same time, we have maintained our investments in innovation and marketing to reinforce our commitment to delivering future growth.”

“As a result, despite lapping strong fourth quarter comparatives from 2008, we are increasing our guidance for revenue growth to be around the middle of our 4-6% goal range for the year as a whole and our underlying operating margin improvement to be at least 135bps in constant currency in 2009.”

The company did not discuss the prospects of a Kraft takeover, although Roger Carr, Chairman of Cadbury, again highlighted their confidence in the standalone nature of the business.

“The strength of our operating performance continues to underpin the Board’s confidence in both our growth prospects and the potential for creating further, material shareholder value as a pure play standalone confectionery business,” he concluded.

Kraft reports their latest sales figures on November 3 and has until November 9 to make a binding takeover offer to Cadbury.