Cadbury to cut workforce
London, June 20, 2007
Confectionery and drinks giant Cadbury Schweppes has announced plans to cut 15 per cent of its staff by 2011.
The UK firm said the 7,500 jobs would go as part of a cost reduction plan that would also see about 15 per cent of its manufacturing sites close.
Cadbury, which employs 50,000 people globally, has yet to say whether any of its UK plants will be affected.
The firm's headquarters are in London, while its main chocolate-making factory is based in Bournville, Birmingham.
A BBC report, citing its Business Editor Robert Peston, said the Bournville site was likely to be largely unaffected.
Cadbury has another chocolate plant in Keynsham, near Bristol, and a cocoa processing operation in North Wales.
It also has a milk-processing facility in Herefordshire, a sugar factory in Sheffield and a medicinal confectionery business in Crediton, Devon.
The reorganisation will cost Cadbury about £450 million in a one-off charge.
But it said that as a result, its profit margins should increase from 10.1 per cent to the mid-teens by 2011.
'Over the past three years, we have made great strides in improving our business performance,' said Cadbury chief executive Todd Stitzer.
'The plans announced today represent the next step in transforming our confectionery company from being the biggest global confectionery company to being the biggest and the best.'
The Transport & General Workers' Union, which represents more than 2,000 of Cadbury's UK staff, said the news of job cuts was a 'grave concern'.
'Cadbury's is an iconic British brand which is a good and successful company that is clearly profitable,' said Brian Revell, the T&G's national secretary for food and agriculture.
'We have worked hard with Cadbury in recent years and co-operated in a change programme which means the UK factories are extremely efficient.
'We are, therefore, concerned by today's announcement which we are convinced is driven by the threat of a takeover by private equity.'
Cadbury also said it would probably now sell off its drinks business, as part of plans to split the company in two.
The company said unnamed parties had expressed an interest in buying the Schweppes unit, which produces drinks such as Dr Pepper and 7-Up.
This sale could raise more than £7 billion, and the interested parties are said to be private equity groups.
US newspapers say two private equity consortia are looking at Schweppes, with the first comprising Bain Capital Partners, Thomas H Lee Partners and Texas Pacific Group.
The second is said to be Blackstone Group, Kohlberg Kravis Roberts and Lion Capital.
Others say Schweppes could see a third offer by a group led by Canadian drinks-maker Cott.
Following the expected sale, Cadbury said it would simply remove the Schweppes part of its name.
The firm has been under pressure after poor European sales and a costly salmonella scare in the UK - which led to a million chocolate bars being recalled - saw profits fall sharply last year.