Cadbury chief executive Todd Stitzer overnight (16 September) defended the UK confectioner’s record, insisting the company had “delivered on its promises” and laid out its plans for further expansion.

Nine days after Kraft Foods had gone public with a proposed GBP10.2bn (A$19.6bn) takeover of Cadbury, and following a week in which the US company had repeatedly outlined why the Dairy Milk maker faced a challenging future as an independent company, Stitzer insisted the UK firm could prosper alone.

In a speech to analysts at the Sanford Bernstein Strategic Decisions Conference in London, Stitzer praised Cadbury’s performance since the acquisition of US business Adams in 2003 and said its programme to boost margins – dubbed Vision into Action – had paid off.

Stitzer also claimed Cadbury, through focusing on innovation, building its presence in emerging markets like India and accelerating plans to enter new markets, had “a lot more to deliver” to shareholders.

“By the end of our Vision into Action plan, we will be well positioned to embrace the next phase of our development as a leaner, more flexible and faster-moving pure-play confectionery company with the vision and innovation to seize the opportunities that arise and the scale and financial strength to do so,” Stitzer said.

Stitzer launched Cadbury’s Vision into Action programme in 2007 in a bid to improve the Trident gum maker’s margins. The company pressed ahead with a sustained restructuring programme that involved job cuts in markets including the UK, Spain, Australia and New Zealand and the expansion of sites in territories including Poland.

The Cadbury boss said today that 2009 should be the “peak in our investment cycle” and that the business would start to see “strong free cash flows” to return to shareholders and invest in the business.

“We are delivering on our promises, generating the revenue growth, margin improvements and strong earnings growth our investors are looking for. And – from 2010 onwards – the strong free cash flow that will generate returns to shareholders and provide fuel to capitalise on new growth opportunities,” Stitzer said.

“Looking beyond 2011, we will be well positioned to capitalise on new revenue growth opportunities, sustain best-in-class margins, while reinvesting in further efficiency initiatives.”

Cadbury shareholders have so far supported the company’s rejection of Kraft’s proposal and industry analysts believe Kraft will have to raise its bid to stand a chance of winning the backing from Cadbury shareholders.

“We have welcomed the management moves to improve shareholder returns, and think these initiatives have much further to run,” said Mark Burgess on behalf of Legal & General last week.

“We also note the valuations of other recent food transactions. As such we therefore believe this approach materially undervalues Cadbury and support the management in rejecting it.”

Click to read the response of Cadbury’s Chairman to the Kraft offer.

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