Kraft’s acquisition of Cadbury has helped the US firm to post higher-than-expected profits, despite a decline in its own North American sales.
Cadbury accounted for 90% of the 25% rise in Kraft’s net revenues to $12.3bn during the second quarter of 2010, boosting earnings by 13% to $937m.
The US food giant, whose other brands include Maxwell House coffee and Oreo cookies, said net revenues from Kraft Foods declined 1.9% in North America due to weak consumer conditions and aggressive promotional activity by rivals. Cadbury – the owner of brands including Dairy Milk, Halls and Green & Black’s - saw revenues growth in the region of 7.5% over the same period after successful new product launches for gum brands Trident and Dentyne.
Kraft’s revenues increased 34% in Europe, of which 31.8% came from the Cadbury acquisition. Cadbury’s own performance was flat in the quarter as solid growth in Britain and France was offset by weak condition in southern Europe, particularly Spain and Greece, as well as the impact of an early Easter.
Kraft, which bought Cadbury in a controversial $18.2bn takeover in February, said it was making “excellent progress” on the Cadbury integration.
Total cost synergies from the Cadbury deal are now likely to be at least $750m, up from $675m. The company did not provide further details.
On the results, chief executive Irene Rosenfeld said: “We delivered strong earnings in the quarter and the first half of the year, despite difficult conditions in many markets that tempered top-line growth.”
Kraft caused outrage after the acquisition by announcing that Cadbury’s Somerdale factory near Bath would close despite earlier pledges to keep it open.
It also drew the fire of UK unions when it announced its first job cuts within weeks of the takeover, including at Cadbury’s offices in Uxbridge, west London, and Bournville in Birmingham as it looked to cut out duplication in its newly enlarged operations.