Chocolate division helps Cadbury navigate “challenging trading conditions”
The world’s second largest confectioner, Cadbury, has this afternoon announced revenue growth of four per cent in constant currencies in the first half with their chocolate division and emerging markets the catalysts.
They again recorded strong growth in the Pacific which, combined with robust results in emerging markets and the UK, helped offset soft trading in Europe.
Operating profit surged by 35% thanks to sales growth, margin improvements, the sale of Schweppes in Australia and positive currency fluctuations.
“We made good progress in the first half in challenging trading conditions,” Todd Stitzer, Cadbury’s CEO, stated. “A strong chocolate performance and good growth in emerging markets more than offset a slow start in North America and continued softness in Europe. At the same time, we significantly improved our trading margin whilst maintaining our investment in marketing and product innovation.”
Pacific performance
Their performance in the Pacific was again robust, with revenue up 3% in the first half. Growth in chocolate, the largest category for the business, was “good”, the confectioner noted.
“The business improved its share of the Australian and New Zealand confectionery markets as it started the re-launch of Cadbury Dairy Milk and benefited from growth in the chocolate category overall,” they advised in a statement. “Overall, underlying operating margin was broadly unchanged.”
Cadbury believed a “stay-at-home culture”, which has prospered since the onset of the global financial crisis, led to increased demand for chocolate and bagged candies. At the same time, despite a softer start to the year, the more functional or ‘activity’ related products, for example medicated candies and gum, started to deliver positive growth.
Major brands record growth
Cadbury’s leading brands largely recorded steady growth, assisted by “increased focus on fewer, bigger initiatives”.
“Within chocolate, Cadbury Dairy Milk and Creme Egg performed well but were outshone by strong growth in other seasonal products and countline innovations,” the company advised. “In candy, The Natural Confectionery Co. and Eclairs both performed strongly.”
“In gum, Trident, the world’s largest gum brand, grew well, reflecting strong growth in Brazil and other parts of Latin America.”
The company has recently begun manufacturing Fairtrade Cadbury Dairy Milk chocolate bars in the UK, and is contemplating further Fairtrade initiatives in the future.
Outlook
“Looking forward for the year as a whole, given the continuing economic uncertainty, we reconfirm our guidance to deliver revenue growth around the lower end of our 4-6% goal range,” Mr Stitzer said. “In addition, we now expect to deliver a full year margin increase of between 80-100 basis points in constant currency.”
