Cadbury Schweppes Share Discussion Threads

[topicel] 04/11/2009 08:38

OK - it's still thought to be on. We shall see over the weekend no doubt, I'd be amazed if they let it drift up to the wire...

"Earnings: Kraft profit tops estimates, but revenue falls short of expectations


By Mike Hughlett Tribune reporter

November 4, 2009

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Kraft Foods Inc. posted third-quarter profit that handily beat Wall Street estimates Tuesday, but its revenue fell short of expectations, and the company reduced its sales forecast for the rest of the year.

The Northfield-based packaged-food giant recorded net income of $824 million, or 55 cents per share, down 40 percent from the same time last year when the company had a sizable one-time gain. Earnings from continuing operations increased significantly.

Still, the latest results surpassed analysts' estimates by 7 cents per share, though a few cents of that stemmed from a lower tax rate during the quarter, an "unsustainable" way of growing earnings, said Matt Arnold, a stock analyst at Edward Jones.

Kraft's revenue of $9.8 billion was down 5.7 percent from last year and below analysts' forecasts of $10.3 billion, as Kraft dealt with unfavorable currency trends and lower pricing because of falling commodity costs in some areas, including dairy.

The results were released after the markets closed. In after-hours trading Tuesday evening, Kraft's stock was trading at $26.73, down almost 3 percent.

The report comes as a Monday deadline approaches for Kraft to make a formal offer for Great Britain's Cadbury PLC. In September, Kraft made an informal, unsolicited bid of more than $16 billion, which Cadbury soundly rejected.

A falling share price could hamper Kraft's bid for Cadbury, because 60 percent of that deal would be financed by Kraft stock, or at least that was the stipulation in Kraft's informal offer. As Kraft's stock price falls, so does the value of the potential deal for Cadbury shareholders.

Still, one analyst said she doesn't expect Tuesday's results from Kraft to affect the quest for Cadbury.

"I really don't think it has an impact on Cadbury," said Erin Swanson, a stock analyst at Morningstar Inc. "I think they did what they needed to do -- post results that show they continue to gain traction," she said of Kraft's profitability.

In a conference call with stock analysts, Kraft Chief Executive Irene Rosenfeld said the company continues to assess financing options for the Cadbury deal and has been talking to both Kraft and Cadbury shareholders.

"Make no mistake, we will continue to follow a disciplined approach," she said, addressing concerns Kraft may overpay for Cadbury.

"Clearly, there has been a lot of speculation about what we can afford. But what we can afford is not relevant. What is relevant is what Cadbury is worth."

Although some stock analysts have said Kraft will need to increase its offer for Cadbury, the pressure on Kraft has lessened somewhat because no rival bids for Cadbury have materialized.

The strong third-quarter profit performance helped lead Kraft to increase its profit guidance for all of 2009 to at least $1.97 per share, from at least $1.93 per share. But Kraft lowered its 2009 forecast for organic revenue growth -- that is, not including currency swings or acquisitions or divestitures -- to 2 percent from 3 percent.

The lower revenue outlook primarily reflects lower-than-expected input costs, which have led to declining prices on some Kraft goods, the company said. Rosenfeld, in an interview with the Tribune, said that more than half of that expected decline stems from a "precipitous" decline in dairy prices.

The lowered sales outlook also reflects the company's decision to cut some unprofitable sales volume because of weakening economic conditions in parts of Europe, particularly Eastern Europe."


Still playing hardball then, and without doubt the share price will be crucial on both sides of the Atlantic. Kraft needs to go above £8.00 if they have managed to convince Cadbury shareholders no alternative bid is coming and without them the share price will drop back to £6.00-something, which is likely.

So, £8.25 may now do it providing up to 75% is in cash...

Any other thoughts as we approach 9th November deadline day?

Topicel

[kumala] 04/11/2009 08:30

Hey Topical, check out Spob's post no 9 on the other thread, he has a link to an article by the times, makes interesting reading.
K

[topicel] 04/11/2009 08:20

And did Kraft come in with profits? Have they given any inkling of their next move with their results last night?

Makes me a bit nervous that nothing is forthcoming from there this morning...

Topicel

[kumala] 04/11/2009 08:17

So Kraft shares fall on that statement valuing the bid at less than the origonal amount offered, I assume that would mean the bid would have to be significantly raised to be accepted, considering Cadbury's results were better than expected. Time is getting short, to walk away now would see Cadbury's share price tumble, not good for those who bought near to the £8 mark, I feel confident we will see some sort of bid action though, am still in and waiting.
K

[kumala] 01/11/2009 10:59

From The Sunday Times November 1, 2009

Kraft set to go hostile in bid for Cadbury




Irene Rosenfeld, the chief executive of Kraft, is putting the finishing touches to a £10.5 billion hostile bid for Cadbury that will be tabled in the next 10 days.

Kraft will publish its third-quarter figures on Tuesday but a bid is unlikely to be tabled until the end of this week, ahead of the November 9 deadline imposed by the Takeover Panel.

Rosenfeld wants to give investors time to study the results, in particular Kraft's earnings and cashflow.

Analysts believe that Kraft will offer a modest premium to the 745p a share it has already proposed. Without the appearance of another bidder, they say there is little reason for the company to make a knockout offer.

Cadbury shares closed the week at 770p, valuing the confectioner at £10.6 billion. Rosenfeld is understood to be preparing a long campaign and Cadbury is expected to reject the revised offer.

[kumala] 30/10/2009 10:25

Prie holding steady, wider market helps being pretty firm.
K

[kumala] 30/10/2009 08:20

Thanks frankie, took profit from Barc yesterday, but bought back in this morning, let my purchase of Lloyds run through untill today again showing profit, and my Retailer who never lets me down moving up and in profit, all good, need cadburys now to pull something outa the bag......
Cheers
K

[frankiestheone] 29/10/2009 13:15

blimey, how much profit is there in a bar of choc, i only bought one bar and look what happened to the share price wish i bought two bars now
well done KUMALA. HOPE THEY STAY IN PROFIT FOR YOU....

[kumala] 29/10/2009 13:00

Ha nice one frankie, general market looking better today than yesterday, bought two banks and one retailer this morning all in profit at moment, looking to sell out before days end though, market very ficle at moment.
K

[frankiestheone] 29/10/2009 12:24

just to edge my bets again,and so i don't miss out I have just bought a big bar of cadbury choc at half price in my local shop..can't lose out on that one

[kumala] 29/10/2009 09:32

Still a waiting game , and the end (price) is getting near.
K

[topicel] 29/10/2009 09:02

But no talks at CBRY, that's the big difference.

We're fighting tooth and nail against a determined and, imho, unbowed aggressor.

It will be completed - hostile or not.

Topicel

[topicel] 29/10/2009 09:02

But no talks at CBRY, that's the big difference.

We're fighting tooth and nail against a determined and, imho, unbowed aggressor.

It will be completed - hostile or not.

Topicel

[kumala] 29/10/2009 08:11

Talks ended with the nat express saga, share price droped today over 50 points.
K

[frankiestheone] 28/10/2009 18:10

I've still got a few cbry but the way i see it at the moment is that even with a bid of £8.50/£9, thats only 15% increase, also it won't be all in cash. I can see barc putting on 20/25% even more if the statement is good in nov(and it should be) good luck in what ever decisions you make.

[kumala] 28/10/2009 17:16

well done frankie, I admire your confidence in making that decision, as topical says its to close to call hear now, and I.m staying put for the end game, whatever that may be, I have funds available and have been lookimng at Barc, as you probably now by my posts on the thread, but am not sure how the market is going to react tomorrow after today, could go either way, no sure sign for me to make a definate choice on the matter so have opted to wait till the morning, I had funds avavilable recently and decided on Cadbury over Carpetright when they were £8.17, they got to £9.45 just recently, so i lost out on a number of K on that decision, never mind ey, lets hope Cadbury redeems itself and awards us a grand prize.
Ha.
Good luck both.
K

[topicel] 28/10/2009 16:53

A good strategy frankie. Hope it works out as BARC is mighty tempting, but what a bummer if war breaks out over Cadbury and it moves above £9.00?

Too close to the line to bail now, but if funds become available BARC is certainly a value share after the mauling of the last three days.

Bon chance.

Topicel

[frankiestheone] 28/10/2009 16:40

sorry, couldn't resist barc at 315, just had to swap a few. kraft are dragging theire feet so hopefully if barc rises nearer results I'll swap back

[kumala] 28/10/2009 16:14

Price holding well considering carnage on the market........ must be a good sign in itself.
K

[kumala] 28/10/2009 15:54

I know the feeling frankie, what to do, what to do, ! ! !
K

[wad collector] 28/10/2009 12:17

The lull before the storm or the lull before the bigger lull?

[frankiestheone] 28/10/2009 11:21

I'm getting to the thought of why wait for the bid and get a possible 10% here, when the likes of barc have retraced 20%. If the market falls back to 5000 there will be some bargains out there. At least cbry are holding up but i'm getting itchy fingers