UK: Cadbury scraps margin growth targets
Cadbury Schweppes has scrapped its margin growth targets for this year but the company said it would maintain its current forecasts for revenue growth.
Ahead of a conference call today (30 October), the UK-based company said it was focused on delivering superior shareowner returns.
Cadbury Schweppes CEO Todd Stitzer said: "Over the past three years we have delivered the fastest growth in a decade and top quartile shareowner returns by transforming our portfolio, culture and capabilities. I'm confident our team will exploit and expand our competitively advantaged confectionery and beverage businesses from 2007 and beyond to increase shareowner returns."
Cadbury reaffirmed its goals, originally made in 2003, of annual sales growth between 3-5% per annum from 2007.
However, the Dr Pepper and Snapple producer scrapped its margin targets. The company said it is still looking at growth in operating margins over time through cost cuts and driving efficiency, while continuing to invest behind growth.
Of the target itself Stitzer said at a conference call: "The margin target made us too inflexible and we only narrowly missed it. What we want is a more flexible dynamic."
The company said that from 2007, ongoing restructuring charges of around 1% of revenue, would be included in underlying operating profits. Material charges, principally related to M&A activity, will continue to be excluded from underlying operating profits as will brand intangible amortisation, non-trading items and the volatility introduced from IAS 39 fair value accounting, added Cadbury.
In addition, the company's board said it is likely to recommend a 10% increase in the group's final dividend to 9.9 pence, bringing the increase for 2006 as a whole to 8%.
Of its strategy going forward, Cadbury said: "In beverages, we have a regional concentration on North America and Australia, where we have a competitive advantage in both flavour carbonated soft drinks and in premium non-carbonated soft drinks.
"Our goal is to be the best regional beverage business. We will achieve this by further strengthening our route to market by integrating fully the recently acquired North American bottling businesses.
"In addition, we will continue to move our portfolio towards higher growth areas using our consumer insights and science & technology expertise to help us better exploit these opportunities."
Cadbury also announced the appointment of Tamara Minick-Scokalo as president global commercial and member of the chief executive's committee. She will take up her new position on 2 January 2007.
Minick-Scokalo, who previously had a 19-year career at Procter & Gamble, is also currently senior vice-president Europe for Elizabeth Arden.
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