Kraft switches parts of Cadbury to save shareholders millions

US FOOD giant Kraft is to switch key parts of the Cadbury’s financial services operation from Birmingham to Switzerland in a move designed to save the firm millions of pounds in corporation tax.

Estimates are that Kraft may save its shareholders anything up to around £200m by the move, which had been expected by the food industry but which will not endear the firm to an Exchequer already reeling from widescale cutbacks.

When Kraft took over the Bournville firm in an £11.5bn deal in January synergy between operations had been expected as the Cadbury structure was integrated into the US structure.

Unions have expressed concern about what the decision may mean to jobs at Bournville and exact numbers of those affected are not known at this stage.

However, it is not thought that manufacturing operation will be affected – at least in the short term.

Following its controversial takeover of the business, Kraft said it intended turning Bournville into its global R&D centre for chocolate and it has pledged to freeze any job cuts in the manufacturing process for two years.

The latter is thought to be an attempt to placate the workforce following the firm’s dramatic U-turn over the closure of its Keynsham operation, near Bristol, when it first said it intended keeping the factory open only to change its mind shortly after takeover.

Professor David Bailey, of Coventry Business School, said today that the move to switch parts of the Cadbury operation to Zurich was no surprise.

He said it was common practice for firms in the food industry to set up operations in Switzerland to take advantage of the easier tax regime.