Kraft results boost Cadbury bid chances
KRAFT Foods last night posted a better than expected quarterly profit – boosting its chances of a successful bid for Cadbury.
The world’s second largest food company reported earnings of $826m (£502m) or 55 cents a share, in the third quarter.
Analysts on average forecast 48 cents a share at Kraft, whose operating income jumped 38.7 per cent to $1.4m.
However, slower sales and lower prices on food cut its third-quarter profit nearly 40 per cent from a year earlier. Revenue fell nearly six per cent to $9.8bn.
The company has already seen a $16.7bn bid for British chocolate maker Cadbury turned down but is hoping the latest figures will help a renewed bid.
Under a UK takeover ruling it now has until 9 November to submit a formal offer.
Kraft chairman and chief executive Irene Rosenfeld said: “We continue to build our operating and financial momentum despite the difficult consumer environment margin and cash flow trends are strengthening as we successfully execute our growth plan.
“As a result, we expect to deliver higher earnings and cash flow in 2009, while further increasing our brand investments to drive future growth.”
Rosenfeld added on the pursuit of Cadbury: “We remain interested but will maintain a disciplined approach. Our criteria include accretion to earnings in the second year, delivering a return on investment well in excess of our cost of capital, and maintaining both our investment grade credit rating and our dividend.”
A purchase would add Cadbury’s Dairy Milk chocolate to well-known Kraft products including Philadelphia cream cheese and Kool-Aid.