Cadbury Schweppes plans to announce factory closures and job losses today. The company has put in place initiatives to increase margins and reduce costs over the next four years.
One initiative, entitled ‘Fuel for Growth’, is likely to see the number of Cadbury factories and employees worldwide fall by an estimated 20% and 10% respectively. The group currently has 133 factories and around 55,000 employees.
It is hoped that the moves will lead to a reduction in direct and indirect costs, excluding marketing, of £400m a year by 2007. Cadbury estimates that £900m over the 2004-2007 period will be required to deliver these savings. Cadbury intends to reinvest up to one-third of the benefits from its ‘Fuel for Growth’ initiative, with the aim of accelerating sales growth through increased spend on marketing.
Cadbury Schweppes chief executive Todd Stitzer said, “Our ambitious ‘Fuel for Growth’ cost reduction program will provide the funds to increase our investment in marketing and innovation to drive our top line growth. I am confident that in creating a stronger platform for sustained growth, we will progressively deliver superior business performance and thereby superior shareowner returns.”
The company confirmed that it expects full year performance to be broadly similar to the first half.
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