Cadbury set to cut 7,500 jobs in the next four years

12 April 2012

Cadbury Schweppes has announced far more job cuts and factory closures than the City expected as it laid out challenging targets to grow its confectionery business around the world and win a bigger market share.

The 203-year-old company plans to axe 7500 of its 50,000 workers and close up to 11 of its 70 factories over the next four years.

Finance director Ken Hanna, who will be in charge of the costcutting and efficiency drive, admitted the decision was tough for a company with Cadbury's heritage.

He said: "This is a very difficult process. The Quakers who founded Cadbury were very paternalistic and very good business people. We will treat our people well and with respect in the belief that what we are doing is good for the 85 per cent of them that remain with us."

He would not specify where the job cuts will come although Britain and Ireland have underperformed in recent years, hit by IT problems in 2005 and the salmonella-related product recall last year. Hanna said consultations with unions had yet to begin.

He confirmed the head office will move fromLondon's Berkeley Square to Uxbridge.

Cadbury, led by chief executive Todd Stitzer, also confirmed that it is most likely to sell rather than demerge its American soft drinks business, which analysts reckon could fetch up to £8 billion. It will then drop Schweppes from its name.

But Hanna said the sale is not likely until the final quarter of this year. The group will then be entirely focused on confectionery, with the drive to maintain revenues in a market which is being hit by health-conscious consumers and to improve margins from the current 10 per cent to the mid-teens by 2011.

Under its new policy slogan of "fewer, faster, bigger, better", Cadbury will concentrate on its top 13 brands with the main emphasis on five brands which it identifies as having the strongest growth potential: Cadbury, Trident, Halls, Green & Black's and The Natural Confectionery Company.

A number of smaller brands, which together make up 5 per cent of revenues, will disappear although Hanna said there would be none in this country "and frankly most people here would never have heard of them".

Cadbury said it will outsource far more of its cocoa and liquid chocolate needs and has formalised its relationship with Barry Callebaut, the world's largest producer of chocolate.

The Swiss company will provide 20 per cent of Cadbury's chocolate needs, mainly into Poland, but none of this will affect Cadbury's Dairy Milk.

The group said trading had begun well with confectionery sales up 9% in the first quarter, partly due to an early Easter.

On the beverages sale, Cadbury pleased analysts with news that the total tax charge is likely to be a much lower than expected 5 per cent. It also promised a large part of the proceeds will be returned directly to shareholders.

Cadbury shares rose 2p to 708p.

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