Cadbury owner’s profits melt under heat of Brexit and global challenges
Cadbury’s owner Mondelez International has endured a tough year with high advertising costs and weaker demand dragging down its UK performance.
The global giant saw net earnings drop 77% to $1.66bn (£1.33bn) as its 2016 revenues fell 12.5% to $25.9bn (£20.7bn).
Its European operations also struggled, with revenues down 16.4% to $9.8bn (£7.8bn).
“As you read news from around the world these days, it’s clear that an unprecedented number of economies are facing significant disruption and uncertainty,” said Irene Rosenfeld, chief executive of Mondelēz International.
“Slower GDP growth, currency and commodity volatility, the uncertain impact of the Brexit vote, market shocks like the recent demonetization in India, and complex developments in the political landscape, including a backlash against globalisation.
“The impacts from these events are being felt across many companies and industries, and we’re not immune.”
She said the UK market had “good momentum through the first half of 2016” but blamed Brexit for affecting this progress in the second half.
Rosenfeld also highlighted the cost of strong promotion spending in order to defend market share in both the UK and US.
“There’s a lot of trade spending dollars,” she said. “It didn’t do very much to drive the category and, in fact, all it did was sort of margin down the business.
“We chose to participate in that to defend our shares, but that’s not the right way to build the business for the long term. And I think as our customers experience the reality of that spending, we’re going to be able to get back to a more disciplined focus on innovation and brand marketing and price pack architecture.”