UPDATE 3-Cadbury cuts more jobs as Q3 sales rise 6 pct

Tue Oct 14, 2008 4:10am EDT

Related Topics

* Nine-month revenues up 7 pct

* On track to meet year financial goals

* Announces further 580 job cuts

* Still reviewing future of Australian beverage unit

* Shares up 3.3 pct at 515 pence (Adds Chief Executive comment, analyst, shares)

By David Jones

LONDON, Oct 14 (Reuters) - British confectionery giant Cadbury Plc CBRY.L reported a 6 percent rise in third-quarter underlying sales as it announced a further 580 job cuts to keep it on track to meet its annual sales and profit margin goals.

The London-based group, which makes Dairy Milk chocolate, Trident gum and Halls cough drops, said it was not immune to the current financial crisis and economic slowdown but it operated in relatively resilient markets for chocolate, gum and candy.

"Our business is affected to some extent, but we operate in broad markets for affordable treats and are less affected in difficult times," Chief Executive Todd Stitzer told a briefing following a third-quarter trading update.

Cadbury, which is facing a slowdown in world markets, higher cocoa prices and the threat from new industry leader Mars-Wrigley, said its nine-month revenues rose 7 percent after a first-half increase of 7.3 percent.

"This appears a strong update. We would expect the shares to react positively today," said analyst Jeff Stent at Citi.

Cadbury shares rose 3.3 percent to 515 pence in a London market up 3.7 percent by 0750 GMT. They have underperformed the FTSE 100 .FTSE by three percent and DJ Euro food and beverage industry .SX3P by 8 percent since early September.

Cadbury announced 250 job cuts as it swept away its regional structure, which will see its seven business units report directly to the chief executive. A further 330 jobs will go in its Australian and New Zealand confectionery business and it is still reviewing the future for its Australian beverage business, which many analysts believe will eventually be sold off.

These further job cuts come after Cadbury announced in June 2007 that it would cut 15 percent of its staff and factories to streamline its operations; which would mean a loss of 7,500 jobs worldwide and the closure of ten plants.

The group added it expected commodity and input costs to rise between 6 percent and 8 percent in 2009, after an estimated rise of 5-6 percent for 2008, with Finance Director Ken Hanna warning of cocoa "cost headwinds" and high energy costs.

Cadbury reiterated 2008 sales growth would be around the top of its medium-term 4-6 percent range while its operating margin will meet a consensus forecast of 11 percent from 2007's 9.8 percent. It aims for a mid-teens operating margin by 2011.

Cadbury, which spun off its North American beverage business Dr Pepper Snapple (DPS.N) in May, lost its crown as the world's largest confectionery group when U.S.-based Mars completed its takeover of chewing gum group Wrigley earlier this month. (Reporting by David Jones; Editing by Chris Wickham and Simon Jessop)

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