Cadbury to cost-cut despite profits hike

Dairy Milk maker Cadbury today posted a 46% leap in first-half profits and said it would take “whatever measures necessary” to combat commodity cost rises.

Strong demand for brands such as its Dairy Milk chocolate and the new Creme Egg Twisted Bar helped drive the hike in underlying pre-tax profits to £223m (€283m0, said Cadbury.

But the group, which spun off its drinks arm in May and dropped the Schweppes brand from its name, said it was stepping up its cost cutting efforts to tackle challenging conditions and input price increases.

Cadbury has already upped its prices by 3% to 4% in the past year, which will be looked at again as part of a top-down business review to ensure it meets goals to grow revenues by 4% to 6% and achieve “mid-teens” profit margins growth.

Staff numbers will also be reviewed, the group confirmed.

Cadbury chairman Roger Carr said: “Against a background of more challenging economic conditions, we will take whatever measures are necessary in costs, prices, organisation structure and business portfolio to underpin and deliver the performance commitments we have made for 2008 and beyond.”

Sales in the first six months of the year were ahead of the group’s targets, up 7.3% on a like-for-like basis.

Cadbury said it now expects revenues growth at the top end of its 4% to 6% range, despite battling against soaring input costs of around 5% to 6% this year, which will be weighted towards the second half, it said.

Cadbury spent £52m (€66m) more on marketing – at £297m (€377m) – to help boost sales.

Revenues rose by 3% in Britain, helped by its move out of less profitable promotions and new launches, including the expansion of its Trident gum range, with a new chocolate-centred Trident Sweet Kicks and other centre-filled flavours.