1 2 0 0 9 Half Year Results 29 July 2009 2 Roger Carr Chairman - - PDF document

1

2 0 0 9 Half Year Results

29 July 2009

2

Roger Carr

Chairman

3

Agenda

Chairman’s comments Roger Carr First Half Highlights Todd Stitzer Operational and Financial Review Andrew Bonfield Strategic Update and Outlook Todd Stitzer

4

Todd Stitzer

Chief Executive Officer First Half Highlights

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First half highlights

Good financial perform ance

• Revenue growth of 4%
• Improved trading momentum as the half progressed
• Underlying operating margins up 145 bps
• Benefit of restructuring, good cost control and media deflation
• Reported currency margin 11.5%
• Pro-forma earnings per share up 12% ; reported 24%
• Interim dividend of 5.7p; up 8%

Growth or change shown on a base business, constant currency basis

Vision into Action

Grow th Efficiency Capabilities Sustainability Total confectionery share gain Strong dividend growth Efficient balance sheet 4-6% organic revenue growth Mid-teens margins by 2011 Improved return

• n capital

7

Drivers of revenue grow th and m argin im provem ent

• Emerging markets
• UK market
• Chocolate category
• Gum and candy recovery
• Pricing power

Grow th Efficiency

8

Em erging m arket grow th

Em erging m arket contribution to revenue

• 1. Overall revenue growth in period

Emerging markets Developed markets

H1 2009

+ 31% + 69%

FY 2008

+ 40% + 60%

4 % 1

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Case study

• Revenue up 20%
• Market share up 220bps

I ndia

Consum er preferred brands & products

I nternet page view s

7 m

10

Strong trend toward sugar-free gum up 500bps in five years*

Case study

South Am erica

Consum er preferred brands & products

Trident/ Beldent up 23% in the first half Product innovation Stronger distribution Creative marketing

+ +

* Source: Euromonitor

11

UK m arket grow th

Market performance

• Category grew 2%
• Cadbury grew 14%
• Market share up 210bps

Category focus & innovation

+ 1 7 % + 1 2 % + 1 4 %

Q1 Q2 H1

2 0 0 9 revenue grow th

+ 2 3 0 bps

share gain in im pulse

£ 5 0 m

revenue from new products in first half

12

Custom er service level

9 8 .4 %

An aw ard w inning year

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Strong chocolate perform ance

Revenue grow th by quarter

Q1 Q2 H1

+ 7%

• 2%
• 2%

+ 10% + 13%

+ 2% + 2% 0% 0%

Consum er preferred brands & products

Gum Candy

14

Re-launch of Cadbury Dairy Milk in ANZ

• New format
• Excellent acceptance levels
• Supply chain efficiencies
• Incremental improvements to profitability

* Nielsen: 4 weeks to end of May in Australia

Chocolate share*

+ 1 2 0 bps

15

I m proving trend in gum and candy

+ 1 6 %

globally in Q2

+ 2 3 %

in H1

+ 6 %

globally in Q2

Percentages are year on year growth

+ 1 0 %

in US in Q2

+ 1 5 %

in Q2

16

Pricing benefits in the first half

Price realisation is essential to recover all input cost inflation

+ 4 %

Price mix Volumes Revenue Growth

Price Mix

Destocking Portfolio Rationalisation

• Price realisation by…
• Price point movements
• Resizing
• Changes in promotion
• Successful delivery through…
• Relevant innovation
• Effective marketing

17

Drivers of revenue grow th and m argin im provem ent

Efficiency

• Vision into Action projects
• Effective cost control with

supply chain and SG&A

• Emerging markets
• UK market
• Chocolate category
• Gum and candy recovery
• Pricing power

Grow th

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I m pact of efficiency

SG&A

5 0 1 0 0 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1

Central costs, SG&A and outsourcing Supply chain reconfiguration

% of expected annual savings

• Reduced head office costs
• SG&A cost savings
• De-layered organisation

Supply Chain

• Closure of gum facility in

Barcelona

• Integration of Turkish gum

manufacturing

19

Sustainability com m itm ents

Perform ance driven, values led

20

Conclusions

Good revenue grow th

• Market share gains
• Effective price realisation
• Steady volumes

UP 4% UP 145 bps

Grow th Efficiency Excellent m argin progress

• Gross margins broadly unchanged
• Media deflation and marketing phasing
• Significant Vision into Action cost

savings

• Effective cost control with supply chain

and SG&A

21

Andrew Bonfield

Chief Financial Officer Operational and Financial Review

22

+ 1% volume

Grow th drivers: price, volum e & m ix

FY 2 0 0 8 H1 2 0 0 9 + 6% price mix + 6% price mix 4% growth

Destocking Portfolio Rationalisation

23

Margin analysis

Gross Margin

• Price, product mix and input

costs

• Category mix
• Volume de-leverage

Gross Margin 2008: 47.3%

Net movement

• 20bps

2009: 47.1% Trading Margin 2008: 9.7%

Gross Margin

• 20bps

Marketing + 90bps SG&A & Other + 100bps Inflation SG&A

• 25bps

2009: 11.2% Trading Margin

• Marketing: media deflation

and re-phasing to match second half innovations

• Vision into Action:

reduction of SG&A costs

• Cost inflation, particularly

in emerging markets

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Operating m argin track

Detailed drivers of m argin progression

+ 100 bps

• 20 bps
• 25 bps

Gross Margin Inflation

• n SG&A

Vision into Action Savings Foreign Exchange Constant Currency

+ 90 bps

Marketing

9 .7 % 1 1 .5 %

HY 2008 H1 2009

+ 35 bps

1 4 5 bps im provem ent at constant currencies

1 1 .2 % 25

Margin outlook

• Overall gross margin expectations remain unchanged

reflecting:

• A more balanced recovery of higher input costs; and
• Modest improvement in category mix
• Improvement in marketing as a percentage of sales will be

less than seen in the first half

• Fewer SG&A initiatives delivering full benefits, therefore

cost improvement will be lower Expected full year m argin increase 8 0 -1 0 0 bps

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Revenue and profit grow th

Continuing Operations

(57) Net interest Half Year (£m)

2009 % Reported % Constant currency

Revenue 2,767 13% 4% Underlying profit from operations 319 35% 19% margin 11.5% + 180 bps + 145 bps Pension charge (3) Underlying profit before tax 262 24% 11% Underlying profit after tax 189 26% 13% Pro forma EPS 13.9p 24% 12% 27

Britain & I reland 2 3 %

• f group

revenues

+ 1 2 %

revenue growth1

+ 2 2 0 bps

underlying margin2

• Strong revenue growth and margin improvement
• Growth driven by market share gains led by innovation and strong seasonal sales
• Gross margins were slightly lower, reflecting input cost inflation
• Operating margins improved by 220bps

revenue growth1 underlying margin2

7 %

• f group

revenues

+ 1 1 % + 4 0 0 bps

• Strong first half performance
• South Africa driving top line growth
• Change programmes in Nigeria and Egypt help deliver good margin progress

Middle East & Africa

• 1. Defined as base business revenue growth
• 2. Defined as base business underlying operating margin excluding BIC

Asia 7 %

• f group

revenues

+ 1 2 % + 3 3 0 bps

• Strong growth in India as business continues to gain share
• Tough conditions in South East Asia start to ease
• Strong first half margin performance driven by increased revenues, partially
• ffset by increased absolute marketing investment

1 3 %

• f group

revenues

+ 3 % + 2 0 bps

• Steady performance in the first half
• Good growth in Chocolate reflected share improvements

Pacific

revenue growth1 underlying margin2 revenue growth1 underlying margin2

• 1. Defined as base business revenue growth
• 2. Defined as base business underlying operating margin excluding BIC

North Am erica 2 1 %

• f group

revenues

• 3 %

+ 1 1 0 bps

• Modest growth in the second quarter after a slow start due to de-stocking
• In the US candy remained strong with Swedish Fish and Sour Patch Kids

performing very well

• Mexican market is an area of modest concern due to weak economic

conditions and Swine flu concerns

8 %

• f group

revenues

+ 1 2 % + 1 7 0 bps

• Sustained strong first quarter progress through the first half
• Good revenue growth helped generate a strong improvement in margins

South Am erica

revenue growth1 underlying margin2 revenue growth1 underlying margin2

• 1. Defined as base business revenue growth
• 2. Defined as base business underlying operating margin excluding BIC

Europe 1 8 %

• f group

revenues

• 5 %
• 3 1 0 bps
• Markets in Europe remained challenging
• Some improvements in the half, but remains a major cause for concern
• Acceleration of restructuring through management and organisational

changes with an additional cost of £25m

revenue growth1 underlying margin2

• 1. Defined as base business revenue growth
• 2. Defined as base business underlying operating margin excluding BIC

down £ 9 m

£ 5 2 m

total costs in first half

• Central costs reduced reflecting VIA initiatives implemented in 2008
• Benefits from VIA initiatives are weighted to the first half

Central

(reported currency)

Technical guidance: 2 0 0 9 update

• Vision into Action restructuring spend expected to be around

£550m up from £450m due to:

• Increased costs as a result of sustained Sterling weakness
• Provisions on redundant properties increased to reflect

property market deterioration

• Restructuring of European business
• £40m of the additional money should be charged this year
• 2009 Vision into Action restructuring now expected at £160m
• Period end net debt is £1.8bn reflecting higher levels of

working capital

£ 7 5 m £ 2 5 m

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Financial highlights

• Good progress in revenue, market shares and margin
• Progress driven by the successful implementation of our

Vision into Action business plan

• Strengthened financial position;
• Issuance of a £300m bond in March
• Receipt of proceeds for Australia Beverages
• Renewal of £450m banking facility for three years

Strong financial perform ance in first half of 2 0 0 9

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Todd Stitzer

Chief Executive Officer Strategic Update and Outlook

34

First half category trends

Chocolate

• Benefiting from a strong ‘stay at home’ trend
• Mainstream benefiting from trading down
• Affordable treats and gifts for the consumer

Gum

• Greater impact from economic downturn
• In certain markets, consumer behaviour changed dramatically
• Innovation and marketing underpinning share gains and

helping market growth

Candy

• Performing well in traditional indulgent candies
• Improving in the cough/ cold segment

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Confectionery m arket grow th

Average developed market growth Average em erging market growth

Cadbury’s m arkets continue to show resilience

Average of Cadbury’s top 5 developed and top 5 emerging markets. Growth rates taken from Euromonitor

4% 2006 9% 3% 2008 12% 4% 2007 10% 3% 2011E 9% 2% 2010E 10% 2% 2009E 10%

First half m arket share perform ance

Growing

Declining

Market Share

50% 25% 25%

37

Building innovation m om entum to capture share

Large bags

£15m since April launch

Fun on the Farm

Sub-brand growth + 14%

38

Building innovation m om entum to capture share

Bubbaloo

Cadbury India bubblegum share 10%

Chiclets

Sugar-free gum market up 500bps

Trident

Trident/ Beldent franchise up 23% 39

Chocolate

Developed m arkets account for over 7 0 % of Cadbury revenue

Source: Euromonitor and company estimates, average for 2005 - 2008

Market Cadbury 1 2 3 4 5 6 7 2005 2006 2007 2008 2009E

+ 5 .6 % + 4 .6 %

%

Average

Chocolate m arket rem ains positive for Cadbury’s business

Wedel relaunch Drive share of new channels CDM relaunch Various renovations Efficiencies Chocolate innovations Chocolate innovations Snack bars CDM relaunch Fairtrade, innovations in CDM and countlines 9 m ajor m arkets

* Euromonitor 2008

France New Zealand Canada South Africa Poland I reland I ndia Australia UK # 1 # 6 # 1 # 3 # 1 # 1 # 1 # 1 # 1 Cadbury m arket position* Grow th initiatives 41

Fairtrade

• First major confectionery brand to go Fairtrade
• Builds brand equity
• Ensures security of supply of cocoa
• Will benefit several thousand farmers and their communities

Gum

I nnovation driven strong out-perform ance

Market Cadbury

+ 6 .8 % + 1 1 .2 % Average

2 4 6 8 10 12 14 16 2005 2006 2007 2008 2009E

%

Source: Euromonitor and company estimates, average for 2005 - 2008

Invest behind stable route to market Renovation and platform extensions Continued roll-out of new platforms Platform extensions Leverage new innovations Various platform extensions Various renovations and extensions Continued roll-out of new platforms Continued roll-out of new platforms Platform innovation core brand renovations and new products Em erging Developed # 2 Russia # 1 Turkey # 1 Brazil # 1 Mexico # 2 Spain # 2 Japan # 1 France # 2 US

Gum m arket outlook increasingly positive

* Euromonitor 2008

Cadbury m arket position* Grow th initiatives 44

Trident Layers

• New platform in gum - initially targeted at the US
• Positive response from the trade
• In-store launch in September

45

Candy

Mom entum building after period of SKU rationalisation

Market Cadbury

+ 3 .6 % + 3 .2 % Average

1 2 3 4 5 6 7 2005 2006 2007 2008 2009E

%

Source: Euromonitor and company estimates, average for 2005 - 2008

Halls Creamy Innovation New flavours Additional renovation and new formats Eclairs renovation in India and China Roll-out of The National Confectionery Co. Extend strong brands, personalise week status # 1 Canada Spain Venezuela Brazil Mexico US I ndulgent Traditional bags Other Halls

W ell positioned brands to capitalise on Candy m arket grow th

* Euromonitor 2008

Cadbury m arket position* Grow th initiatives 47

Halls Cream y

• Double-digit growth in the first half
• Excellent trade buy-in
• Encouraging repeat sales
• 280 bps share gain in Brazil

Recent grow th has been price driven

2005 – 2006 figures not like for like

Price increases successfully recovered cost of raw m aterials

Price Mix Volume

Up 7% 2008

6% price mix

Up 6% 2006 Up 5% 2005 Up 7% 2007

5% price mix

H1 2009 Up 4%

6% price mix

49

Continuing to invest in m arketing and innovation

% of NSV

Target 1 .5 %

Science & Technology

% of NSV

Marketing spend

% of NSV

Target 1 5 %

I nnovation

Ongoing investm ent is driving volum e grow th

9 1 1 2 0 0 6 2 0 0 7 2 0 0 8 1 .0 1 .5 2 0 0 6 2 0 0 7 2 0 0 8 2 4 6 8 1 0 1 2 1 4 1 6 2 0 0 3 2 0 0 6 2 0 0 7 2 0 0 8

50

W ell positioned to generate revenue grow th in the future

momentum in market share momentum in innovation

Need to continue m om entum …

momentum in marketing

+ +

51

I m proving efficiency

• Efficiency benefits of Vision into Action will come through
• Supply chain projects set to deliver expected savings in 2010 and

2011

• Central costs under control
• Well on track with SG&A savings
• Sustaining our investments in growth opportunities
• Further important initiatives in Europe
• Generate greater efficiencies to offset sustained economic

weakness

52

I nvestor sem inars

• Provide more insights into a pure-play confectionery business
• Our businesses
• Our categories
• Our change programmes
• Provide exposure to more of the Cadbury management

First sem inar

• 11 November – Britain and Ireland
• Hosted by Trevor Bond and his leadership team

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Positive outlook

2 0 0 9

• Strong first half performance
• Expect to deliver against forecasts

Looking beyond 2 0 0 9

• On track to deliver Vision into Action
• Good revenue growth of 4-6% per annum
• Mid-teens margins by 2011

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Except for historical information and discussions contained herein, statements contained in these materials may constitute “forward looking statements” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as

• amended. Forward looking statements are generally identifiable by the fact that they do not relate only

to historical or current facts or by the use of the words “may”, “will”, “should”, “plan”, “expect”, “anticipate”, “estimate”, “believe”, “intend”, “project”, “goal” or “target” or the negative of these words

• r other variations on these words or comparable terminology. Forward looking statements involve a

number of known and unknown risks, uncertainties and other factors that could cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are based on numerous assumptions regarding the present and future strategies of each business and the environment in which they will operate in the

• future. In evaluating forward looking statements, you should consider general economic conditions in the

markets in which we operate, as well as the risk factors outlined in our Form 20-F filed with the US Securities and Exchange Commission and posted on Cadbury plc’s website www.cadbury.com. These materials should be viewed in conjunction with our periodic half yearly and annual reports and other filings filed with or furnished to the Securities and Exchange Commission, copies of which are available from Cadbury plc, Cadbury House, Uxbridge Business Park, Sanderson Road, Uxbridge UB8 1DH, UK and from the Securities and Exchange Commission’s website at www.sec.gov. Cadbury plc does not undertake publicly to update or revise any forward looking statement that may be made in these materials, whether as a result of new information, future events or otherwise. All subsequent oral or written forward-looking statements attributable to Cadbury plc or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.

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Supplem entary I nform ation

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Sales analysis – seven business basis

57

352 38

• 10

304 Pacific 635 12 (9) 67 565 B&I 211 24

• 19

168 MEA Half year (£m) 2008 Base Business M&A FX effects 2009 Europe 496 (26)

• 37

507 North America 553 (15)

• 110

648 South America 196 23

• (6)

213 Asia 154 19

• 25

198 Central 4 (1)

• 3

Continuing Group 2,440 96 (9) 240 2,767

Underlying profit from operations– seven business basis

58

47 7

• 1

39 Pacific 79 1 1 19 58 B&I 22 4

• 8

10 MEA Half year (£m) 2008 Base Business M&A FX effects 2009 Europe 35 (13)

• 4

26 North America 108 2

• 25

135 South America 37 8

• (3)

42 Asia 11 7

• 2

20 Central (61) 12

• (3)

(52) Continuing Group 237 44 1 37 319

I nput cost increases

Com m odities: rising input costs £m 2008 H1 average 2009 H1 average % Change Current* World sugar, c/ lb 13.2 14.7 11% 19.4 Cocoa, £/ tonne 1,306 1,701 30% 1,819 Oil, $/ barrel 109 55

• 49%

71 Milk, p/ litre 26.8 27.8 4% 26.1

* Source: Bloomberg as at 23 July 2009

2 0 0 9 price realisation should offset input cost inflation

59

Non-trading item s

60

• 1

Sale of intellectual property Half year (£m) 2009 2008 Disposal of non-core businesses

• (6)

Reported 1 ( 6 )

EPS drivers

Continuing ops UEPS pro forma 2008 11.2p* Base business growth 1.4p 12.5% Change in number of shares (0.1)p (0.9)% Foreign exchange 1.4p 12.5% 2 0 0 9 13.9p 24.1%

* Assumes share consolidation relating to the demerger was in place for all of 2008

Restructuring costs

62

(5) (13) Acquisition integration costs (105)

• (1)

(91) 2009 (3) Gumlink Half year (£m) 2008 Restructuring Restructuring - Vision into Action (48) Separation and creation of stand- alone confectionery costs (14) Total (70)

Net financing

63

( 9 2 ) (22) (10) ( 6 0 ) (3) (57) 2009 21

• IAS 39 adjustments

Interest on tax and other provisions £m 2008 Net interest (45) Pension (charge) credit 16 Underlying net financing charge ( 2 9 ) Statutory net financing cost ( 8 )

Balance sheet

64

3 ,0 8 7 7 3,080 3 ,0 8 7 (1,763) (552) (482) 2 287 5,595 2009 Half year (£m) 2008 Non-current assets 5,137 Net working capital 51 Assets held for sale less associated liabilities 3 Net retirement benefit liability (18) Provisions and deferred tax liabilities (458) Net borrowings – continuing group (1,700) Net assets 3 ,0 1 5 Ordinary shareholders’ funds 3,006 Minority interests 9 Total capital em ployed 3 ,0 1 5

Cash flow

18

• Pension funding

( 2 1 6 ) (163) ( 5 3 ) (102) (66) (213) 26 104 (3) 2 0 1 2009 con’t ops 3 Cash generated from operations (63) Interest ( 1 2 7 ) (148) (62) (129) 18 98 3 1 3 8 2008 con’t ops Half Year (£m) Profit from operations* Restructuring Depreciation Other items Working capital Tax Capital expenditure Free cash outflow

* Profit from operations before intangibles amortisation, goodwill impairment, restructuring, non-trading items and IAS39 adjustment

Borrow ing profile

66

Half year 2009 2008 Net debt maturity profile Less than 1 year 20% 37% 1-3 years 9% 8% More than 3 years 71% 55% Fixed rate debt: % total net debt 53% 71% Average interest rate 5.3% 4.6% Group average interest rate 5.6% 5.5%

Debt profile

• Issued £300m 5-year bond at

5.375% in March 2009;

• Refinanced £450m revolving

credit facility matures June 2012;

• After repayment of €600m

bond in June 2009, £1.4bn of long term debt;

Value of debt instruments Total 0-1yrs 1-5 yrs 6-10 yrs

£ 3 5 0 m

£ 1 0 4 0 m

Maturity profile

£ 1 ,7 6 0 m £ 3 7 0 m

Strong balance sheet w ith good long-term financing

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Sales, profits and borrow ings by currency

Half year (£m) 2009 %

Sales generated in: US dollars 368 13% Sterling 551 20% Euro 363 13% Australian dollars 203 7% Other 1,282 47% Underlying operating profit* generated in: US dollars 74 23% Sterling (5) (2)% Euro 44 14% Australian dollars 31 10% Other 175 55% Net borrow ings before currency sw aps held in: US dollars 1,119 64% Sterling 621 35% Euro (89) (5)% Other 112 6%

* Profit from operations before intangibles amortisation, restructuring, non-trading items and IAS39 adjustment. Excludes American and Australian beverages.

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Exchange rates

69

Rate vs Sterling 2008 average 2009 average % change US $ 1.85 1.50 (19)% Canadian $ 1.96 1.80 (8)% Euro 1.26 1.12 (11)% Australian $ 2.20 2.10 (5)% South African Rand 15.23 13.68 (10)% Brazilian Real 3.35 3.27 (2)% Mexican Peso 20.48 20.66 (1)%

Technical guidance: 2 0 0 9 update

Includes £100m related to Vision into Action £360-400m Capital expenditure Unchanged 28% Underlying tax rate Reflects a fall in asset values plus changes in actuarial assumptions at the end of 2008 used to derive the non-cash P&L charge under IAS19 - £33m unfavourable versus the prior year £6m charge in 2009 Post retirement benefits Interest rate expected to reduce in 2009, reflecting improved financing spreads ~ 6% Underlying interest rate Includes £160m related to Vision into Action ~ £220m Restructuring Assumes current exchange rates remain unchanged for the balance of the year NSV ~ + 5% UOP ~ + 6% Foreign exchange

Comment 2009 Guidance

70