The world's largest confectionery maker Cadbury Schweppes announced a further 580 job cuts despite a 6 per cent rise in third quarter, as it mulls cost reduction initiatives and focus on implementing strategic plans to meet its annual sales and profit targets.
The London based confectionery giant said today that its third-quarter sales rose 6 per cent as a result of continued double-digit growth in emerging markets and also announced 580 job cuts in its UK head office and from its Australia and New Zealand operations.
Sales from emerging markets climbed 13 per cent during the three months to 30 September, with India and South Africa accounting for more than 20 per cent.
Last year Cadbury reintroduced Wispa bars that compete with Nestle's Aero, which were first introduced in 1981 but discontinued in 2003 due to declining sales. With an aggressive marketing campaign backing the relaunch last year, managed to sell 48 million.
Chief financial officer, Ken Hanna said that the job cuts were part of a plan announced in 2007 to reduce staff levels by 15 per cent in order to boost profit margins to the ''mid-teens'' by 2011.
Cadbury had announced in June 2007 that it would cut 15 per cent of its workforce and factories to streamline its operations, which is a loss of 7,500 jobs worldwide and the closure of ten plants.
In its reorganisation plan, it did away with its regional structure where its seven business units report directly to the chief executive. This regional reorganization will see 250 job losses which include a number of senior managers.
A further 330 jobs will go over the next two years in its Australian and New Zealand confectionery business.
The company had spun off its US drinks unit, Dr Pepper in May last year, and it ponders about selling its remaining Australian beverage unit.
The company said through a press release that the current financial crisis and economic slowdown has also hurt the company but it operated in markets not much affected by the crisis.
Due to soaring cocoa prices, the company expects further cost pressures in 2009 and its commodity and input costs for 2009 is expected to be around 6-8 per cent higher than 2008.
Cadbury is currently in the process of implementing price increases in most of its major markets to cover the impact of future cost rises including an 8 per cent rise in gum prices in the US.