Cadbury has booked first-half profit gains driven by improved margins and growing sales, the UK confectioner revealed today (30 July).
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The maker of Dairy Milk chocolate said that in the six months to 30 June pre-tax profits rose 28% to GBP143m (US$283m), up from GBP112m reported in the first half of the previous year.
Sales increased by 14% to GBP2.65bn, up from GBP2.33bn, driven by price hikes and currency exchange.
Stripping out currency fluctuations, pre-tax profit was up 12% and sales were up 7%.
Speaking on a conference call this morning, finance director Ken Hanna said that 6% of the sales gain was the consequence of price rises while only 1% was due to volume growth. Volumes, he said, were hit by Cadbury’s decision to stop production of some low-margin chocolates.
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By GlobalDataCost cuts drove underlying margins up 190 basis points. Last month Cadbury forecast margins growth of “at least 150 basis points”.
“We remain confident of a successful outcome for 2008 with revenue growth around the top end of our goal range and margins in line with current market consensus. Despite difficult economic conditions, we are committed to deliver mid-teens margins by 2011,” CEO Todd Stitzer said.
Hanna said the strong margins performance was not expected to continue into the second half of the year. He forecast full-year margins growth of between 100 and 125 basis points.
Today’s results release is the first for Cadbury as a stand-alone confectionery company after its American beverages unit was spun-off. Net profit, including the contribution of the beverages business, dropped from GBP182m last year to GBP113m for the first half of this year.
Speaking at the company’s results presentation, Stitzer said the group was also reviewing its Australian beverage business, but would not be drawn on whether the business would be sold.
