Cadbury acquisition dents profits at Kraft

THE acquisition of Birmingham-based chocolate manufacturer Cadbury has hit the profits of its new American parent company.

In its latest set of results, Kraft reports that sales in Q4 jumped by 30% after a price hike but the higher costs of integrating Cadbury took its toll on profits, dropping by 24%.

Kraft, headquartered in Illinois, said sales in its business which exclude Cadbury’s various products increased by 6.5% and it had raised overall prices by 1.9% across all of its regions.

Revenues at Cadbury climbed by 2.2% and, following the acquisition last year, Kraft now believes it can increase long-term growth by around 5% in developing markets such as Asia and Latin America.

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Total sales at Kraft, including Cadbury’s products, totalled £8.6bn in the quarter ending December 31, 2010, which was a rise of 30% year-on-year.

However, income fell by 24% to £336m due to higher costs for packaging and other overheads.

Chief Executive Irene Rosenfeld said she expected the company’s costs to rise during 2011 which would mean additional price increases.

The firm also recently announced that a bar of Cadbury’s Dairy Milk would be reduced in size by two chunks.