Cadbury is looking to cut costs on how it buys in flavours and packaging as part of the company’s drive to further improve margins over the next four years.
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In a bid to convince shareholders of its future as an independent company, the UK confectioner this morning (14 December) set out higher targets for sales growth, margins and dividends.
Cadbury has targeted revenue growth of 5-7% a year – compared to its earlier forecast of 4-6% – and improved underlying operating margins of 16-18% by 2013.
CFO Andrew Bonfield said savings in procurement, particularly on packaging and sourcing flavours, would be key to Cadbury meeting its margin target.
“There are no additional [factory] closures planned. One of the things we will be looking at is our procurement activities. There are opportunities for us to rationalise the number of suppliers we will be using,” Bonfield said.
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By GlobalDataThe Cadbury finance chief told just-food that the company, which makes Dairy Milk chocolate, Trident gum and Halls candy, uses 100 packaging suppliers and has a packaging bill of around GBP300m (US$487.5m). The business also has around 20 flavours suppliers, Bonfield added.
He argued that changes to the way Cadbury now structures its business, including the appointment of a global procurement officer this summer, meant that savings could now more easily be made.
“In the past, the regional structure of our business meant operations were decentralised and decisions on procurement were made on a local level,” Bonfield explained.
“There is an opportunity for us to see how we can leverage that by getting good deals across the world.”
