Cadbury plc (CBY), the world’s leading confectionary house, is confident on its growth prospects beyond 2011. Cadbury’s global leadership position in nearly half of the world’s top fifty confectionery markets, along with the company’s strength and breadth within the confectionery industry, should generate revenue growth and operating margin expansion after the sale of the Americas Beverages operation.
The confectionery market is highly fragmented with the top eight customers accounting for 50% of the share, and Cadbury alone making up 10%. Revenue from emerging markets, where the company has a strong presence, represents one-third of the company’s total revenues. These regions are currently growing at a double-digit rate.
Management’s strategy includes focusing on selected leading confectionery brands and reducing costs through restructured operations; improving performance in key emerging markets; and selectively divesting non-profitable businesses. This should increase market share and attain management’s financial goals of long-term organic revenue growth in the range of 4% to 6% and an operating margin in the mid-teens by 2011.
Earlier on September 7, Kraft Foods Inc. (KFT) made a bid to buy Cadbury for about GBP 10.2 billion, which Cadbury refused on the basis of undervaluation. Furthermore, management expressed confidence in its standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope.
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