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Last Updated: Tuesday, 19 June 2007, 18:25 GMT 19:25 UK
Cadbury to cut workforce by 15%
Cadbury's chocolate bar
Cadbury's says separating its businesses is key to future growth
Confectionery and drinks giant Cadbury Schweppes has announced plans to cut 15% 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% 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.

The plans represent the next step in transforming our confectionery company
Cadbury chief executive Todd Stitzer

BBC 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.

Cadbury's shares had fallen 1.3% by early afternoon trading in London, but regained some of its losses to end the day down 0.87% at 700 pence.

'Biggest and best'

The reorganisation will cost Cadbury about 450m in a one-off charge.

Cadbury Schweppes drinks
Cadbury now expects to sell off its drinks division

But it said that as a result, its profit margins should increase from 10.1% 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."

Drinks unit sale

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 7bn, and the interested parties are said to be private equity groups.

BBC business editor Robert Peston
The company is doing to itself what a private equity owner would do
Robert Peston,
BBC business editor

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.




VIDEO AND AUDIO NEWS
Cadbury staff react to the announcement




SEE ALSO
Cadbury plans fuel job concerns
18 Jun 07 |  Business
Cadbury charged over salmonella
15 Jun 07 |  West Midlands
Cadbury admits salmonella charges
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Cadbury confirms plans to split
15 Mar 07 |  Business
Cadbury plans to split business
14 Mar 07 |  Business
Cadbury shares fizz on US stake
13 Mar 07 |  Business

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