AUSTRALIA: Cadbury Schweppes eyes soft drinks sale
Speculation is growing that Cadbury Schweppes intends to sell its Australian soft drinks arm, after it announced a review of the business this week.
Cadbury said in its first half results statement yesterday (30 July) that it would "review the position of our remaining beverage business [in Australia]".
The move follows the sale of its US soft drinks arm, including the Dr Pepper brand, in May and has led analysts to believe a similar fate awaits the Australian division.
One senior analyst told just-drinks today: "It's a bit of an anomaly since they got rid of the US business. It looks like it's on the block."
He added the news that Cadbury would lose its contract to distribute energy drink Red Bull in Australia from January 2009, announced in recent weeks, may have kick-started moves towards a sale. The contract contributed to 6% of the division's gross profit last year.
Cadbury has already begun to disentangle the drinks business, which has annual sales of GBP300m (US$594m), from its Australian confectionery arm, separating "key commercial functions", it said. But the group added this was to improve its focus on the two categories.
"The review will take some months to complete and we will update shareholders on the conclusions of the review when it is complete," it said, adding it would issue a further update in October.
Commenting on the division's first half performance, it said: "While our beverage business in Australia had a good half with share ahead in a market which increased by 3%, revenues were impacted by the planned exit from a non-core manufacturing contract."
Cadbury's Australian drinks arm accounts for 6% of annual group revenue and holds a mid-20s soft drinks market share. Reports suggest a sale of the division may fetch up to GBP600m.
Cadbury Schweppes increased sales by 14% to GBP2.65bn in its first six months of 2008, and 7% excluding currency rate fluctuations. Underlying profit before tax rose 46% to GBP223m, although the group said it aimed to improve operating margins and also warned of an "uncertain economic outlook" in 2009 because of input cost rises.
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