* Cadbury 2008 pretax profit 559 million pounds
* Sees 2009 growth at lower end of 4-6 pct target
* Still looks for mid-teen percent margin by 2011
* Cadbury shares rise 4.1 percent
(Adds further Chief Executive comments, updates shares)
By David Jones
LONDON, Feb 25 British confectionery group
Cadbury Plc CBRY.L took a relatively upbeat view on Wednesday
on demand for its products ranging from Dairy Milk chocolate to
Trident gum, helping boost its shares more than 4 percent.
After meeting forecasts with a 30 percent rise in 2008
pretax profit, the maker of Halls cough drops said it expected
sales to grow towards the lower end of its medium-term 4 to 6
percent target this year, enough to reassure jittery investors.
Chief Executive Todd Stitzer said he was "confident but
realistic" looking into 2009 as other consumer goods companies
around the world were forecasting lower growth this year.
"We are recession resilient not recession proof, with our
own performance set to be resilient in a world of reduced
growth," Stitzer said in a conference call after the results.
He added chocolate eating was on the rise as the economic
slowdown gripped the world with consumers stayed at home and
tucking into more chocolate while chewing gum consumption was
suffering as people travelled less.
"Chocolate benefits as people stay at home, but gum has
suffered. Chocolate sales are holding up well as people buy
multi-packs, stock up the larder, and stay at home," he said
By 1600 GMT, Cadbury shares were up 4.1 percent at 530 pence
in a largely flat London market as analysts said the group saw
good growth and had cut costs as confectionery markets around
the world started to slow over the last six months.
"We believe Cadbury has better growth prospects and a higher
chance of corporate activity than Hershey, and indeed the food
sector as a whole, and as such reiterate our buy
recommendation," said analyst Graham Jones at Panmure Gordon.
The London-based group posted 2008 pretax profits of 559
million pounds ($814 million), in line with an analyst range of
525 million to 580 million and compared to a consensus of 552
million. Earnings per share rose 30 percent to 29.8 pence.
"In the current market environment, we find it unlikely that
there are many companies continuing to grow earnings at these
enhanced levels ... and also doing it consistently, which
Cadbury should over the next few years," said Andrew Wood at
Stitzer said the group had seen good growth across all its
businesses with chocolate sales up 6 percent, gum up 10 percent,
and candy up 6 percent. Its emerging markets, nearly 40 percent
of its business, saw growth of 12 percent.
The group also reported higher 2008 margins, up 1.8 points
to 11.9 percent, with underlying margins up 1.5 percentage
points and the rest of the increase coming from currency. It
stuck by its goal to see mid-teen percentage margins by 2011.
"The key element of the results seems to us to be the
continued margin progress ... this has been achieved despite
mounting fears of some form of input cost related
disappointment," said Rob Mann at Collins Stewart.
Cadbury is facing higher cocoa prices, which hit a 24-year
high in late January, and also other dollar-dominated
commodities as well as the threat from a new industry leader
Mars-Wrigley on top of the slowdown in world markets.
Cadbury shares trade on 13.9-times 2009 earnings, reflecting
the defensive nature of confectionery and its margin gains,
putting it ahead of Swiss-based Nestle NESN.VX on 12.8-times,
but still behind Hershey (HSY.N) on 17.3-times, which gains from
its big share of the U.S. confectionery market.
Cadbury, which spun off its North American beverage business
Dr Pepper Snapple (DPS.N) last May, agreed in December to sell
its Australian beverage business to complete its exit from soft
drinks and to focus exclusively on confectionery.
The 2008 dividend rose 6 percent to 16.4p a share.
(Editing by Rupert Winchester and Andrew Macdonald)