Cadbury beat sales forecasts and raised targets in a bumper third-quarter trading report, pushing up its shares and pressuring suitor Kraft to come up with a bigger bid to win its takeover battle.
The London-based confectionery group, which has interests in Ireland, said underlying sales rose 7 per cent in the July-September quarter, beating even the most bullish forecasts, and unexpectedly increased both its sales and margin growth targets for 2009.
Cadbury said it expected 2009 sales growth of around 5 per cent, up from 4 per cent previously, and its operating margin percentage to jump at least 135 basis points rather than its old target of 80-100 basis points.
Chief executive Todd Stitzer gave an upbeat outlook as the group returned to more "normal" growth rates and saw at least 5 per cent underlying sales growth in 2010 and 2011, but made no mention of the proposed multi-billion pound bid from Kraft.
"We have the momentum and the growth," Mr Stitzer told a telephone briefing after the trading update.
Most analysts had expected Cadbury to report 4 per cent third-quarter sales growth and hold its 2009 sales target at the lower end of its 4 to 6 per cent medium-term range and either hold or slightly nudge up its annual margin target.
Shares in the Dairy Milk chocolate and Trident gum maker were 0.9 per cent higher in early morning trading after it upgraded its targets, which would force Kraft to consider making a higher knockout bid to win over the world's second largest confectionery group.
Cadbury has repeatedly rejected Kraft's £10.2 billion cash and shares proposal made in early September, and the UK Takeover Panel has given Kraft a deadline of November 9th to come up with a firm bid or walk away for six months.
Kraft's takeover proposal of 40 per cent cash and the rest in new Kraft shares valued Cadbury shares initially at 745 pence or £10.2 billion pounds, but the fall in Kraft shares makes it currently worth 728p, over 70p below the current Cadbury share price.
Analysts believe Kraft will wait until after its own third-quarter earnings on November 3rd before raising its bid with many looking for a bid of at least 850 pence, including half in cash, to win the backing of Cadbury's board and not turn to a hostile bid.
Reuters