UK confectioner Cadbury Schweppes has dropped its growth target for operating margin, but the company said it will maintain its current revenue-growth target.
In a statement ahead of a conference call hosted by Cadbury today (30 October), the company said the goals it was announcing today are focused on delivering superior shareowner returns. This includes funding further investment in revenue growth, increasing efficiency to underpin margin growth and continuing to optimise the group’s balance sheet.
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Cadbury reaffirmed its goals, originally made in 2003, of annual sales growth between 3-5% per annum from 2007.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 group dropped its growth target for operating margin. It said it was still looking at growth in operating margins over time through cost reduction and efficiency initiatives, while continuing to invest behind growth. But, 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: “Our goal is to be the biggest and best global confectionery business. We will achieve this by exploiting and expanding our strong brands, geographic presence and superior category positions, delivering fewer, faster, bigger and better innovations, and by selective bolt-on acquisitions.”
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.
Cadbury Schweppes CEO Todd Stitzer said: “We’re delighted to have Tamara on board. Her deep marketing expertise and broad international commercial experience will be invaluable as we move into the next phase of our global commercial agenda.”