2009 Half Year Results. 29 July 2009

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1 1

2 2009 Half Year Results 29 July

3 Roger Carr Chairman 3

4 Agenda Chairman s comments Roger Carr First Half Highlights Todd Stitzer Operational and Financial Review Andrew Bonfield Strategic Update and Outlook Todd Stitzer 4

5 Todd Stitzer Chief Executive Officer First Half Highlights 5

6 First half highlights Good financial performance Revenue growth of 4% Improved trading momentum as the half progressed Underlying operating margins up 145 bps Benefit of restructuring, good cost control and media deflation Reported currency margin 11.5% Pro-forma earnings per share up 12%; reported 24% Interim dividend of 5.7p; up 8% Growth or change shown on a base business, constant currency basis

7 Vision into Action 4-6% organic revenue growth Mid-teens margins by 2011 Improved return on capital Total confectionery share gain Strong dividend growth Efficient balance sheet Growth Efficiency Capabilities Sustainability 7

8 Drivers of revenue growth and margin improvement Emerging markets Growth UK market Chocolate category Gum and candy recovery Pricing power Efficiency 8

9 Emerging market growth Emerging market contribution to revenue +40% +31% 4% 1 +60% FY % H Emerging markets Developed markets 1. Overall revenue growth in period 9

10 Case study India Revenue up 20% Market share up 220bps Internet page views 7m Consumer preferred brands & products 10

11 Case study South America Product innovation + Trident/Beldent up 23% in the first half Stronger distribution + Creative marketing Strong trend toward sugar-free gum up 500bps in five years * Consumer preferred brands & products * Source: Euromonitor 11

12 UK market growth Market performance Category grew 2% Cadbury grew 14% Market share up 210bps 2009 revenue growth +12% +17% +14% Q1 Q2 H1 50m revenue from new products in first half +230 bps share gain in impulse Category focus & innovation 12

13 An award winning year Customer service level 98.4% 13

14 Strong chocolate performance Revenue growth by quarter +13% +10% +7% Gum Candy +2% +2% 0% 0% -2% -2% Q1 Q2 H1 Consumer preferred brands & products 14

15 Re-launch of Cadbury Dairy Milk in ANZ New format Excellent acceptance levels Supply chain efficiencies Incremental improvements to profitability Chocolate share* +120bps * Nielsen: 4 weeks to end of May in Australia 15

16 Improving trend in gum and candy +16% globally in Q2 +23% in H1 +10% in US in Q2 +6% globally in Q2 +15% in Q2 Percentages are year on year growth 16

17 Pricing benefits in the first half Price realisation is essential to recover all input cost inflation Price realisation by Price point movements Mix Portfolio Rationalisation Destocking +4% Resizing Changes in promotion Price Successful delivery through Relevant innovation Price mix Volumes Revenue Growth Effective marketing 17

18 Drivers of revenue growth and margin improvement Emerging markets Growth UK market Chocolate category Gum and candy recovery Pricing power Efficiency Vision into Action projects Effective cost control with supply chain and SG&A 18

19 Impact of efficiency SG&A 100 Reduced head office costs SG&A cost savings De-layered organisation % of expected annual savings 50 Central costs, SG&A and outsourcing Supply chain reconfiguration Supply Chain Closure of gum facility in Barcelona Integration of Turkish gum manufacturing 19

20 Sustainability commitments Performance driven, values led 20

21 Conclusions Growth UP 4% Good revenue growth Market share gains Effective price realisation Steady volumes Efficiency UP 145 bps Excellent margin progress Gross margins broadly unchanged Media deflation and marketing phasing Significant Vision into Action cost savings Effective cost control with supply chain and SG&A 21

22 Andrew Bonfield Chief Financial Officer Operational and Financial Review 22

23 Growth drivers: price, volume & mix +1% volume Portfolio Rationalisation Destocking +6% price mix +6% price mix 4% growth FY 2008 H

24 Margin analysis Gross Margin Price, product mix and input costs Category mix Gross Margin 2008: 47.3% Net movement -20bps 2009: 47.1% Volume de-leverage Trading Margin Marketing: media deflation and re-phasing to match second half innovations Vision into Action: reduction of SG&A costs Cost inflation, particularly in emerging markets Trading Margin 2008: 9.7% Gross Margin -20bps Marketing +90bps SG&A & Other +100bps Inflation SG&A -25bps 2009: 11.2% 24

25 Operating margin track Detailed drivers of margin progression +100 bps 11.2% +35 bps 11.5% -25 bps +90 bps 9.7% -20 bps 145 bps improvement at constant currencies HY 2008 Gross Marketing Vision into Inflation Constant Foreign H Margin Action on SG&A Currency Exchange Savings 25

26 Margin outlook Overall gross margin expectations remain unchanged reflecting: A more balanced recovery of higher input costs; and Modest improvement in category mix Improvement in marketing as a percentage of sales will be less than seen in the first half Fewer SG&A initiatives delivering full benefits, therefore cost improvement will be lower Expected full year margin increase bps 26

27 Revenue and profit growth Continuing Operations Half Year ( m) 2009 % Reported % Constant currency Revenue 2,767 13% 4% Underlying profit from operations % 19% margin 11.5% +180 bps +145 bps Pension charge (3) Net interest (57) Underlying profit before tax % 11% Underlying profit after tax % 13% Pro forma EPS 13.9p 24% 12% 27

28 Britain & Ireland 23% of group revenues +12% revenue growth bps underlying margin 2 Strong revenue growth and margin improvement Growth driven by market share gains led by innovation and strong seasonal sales Gross margins were slightly lower, reflecting input cost inflation Operating margins improved by 220bps Middle East & Africa 7% of group revenue revenues +11% growth +400bps 1 underlying margin 2 Strong first half performance South Africa driving top line growth Change programmes in Nigeria and Egypt help deliver good margin progress 1. Defined as base business revenue growth 2. Defined as base business underlying operating margin excluding BIC

29 Asia 7% of group revenue revenues +12% growth +330bps 1 underlying margin 2 Strong growth in India as business continues to gain share Tough conditions in South East Asia start to ease Strong first half margin performance driven by increased revenues, partially offset by increased absolute marketing investment Pacific of group revenue 13% revenues +3% growth +20bps 1 underlying margin 2 Steady performance in the first half Good growth in Chocolate reflected share improvements 1. Defined as base business revenue growth 2. Defined as base business underlying operating margin excluding BIC

30 North America of group revenue 21% revenues -3% growth +110bps 1 underlying margin 2 Modest growth in the second quarter after a slow start due to de-stocking In the US candy remained strong with Swedish Fish and Sour Patch Kids performing very well Mexican market is an area of modest concern due to weak economic conditions and Swine flu concerns South America of group revenue 8% revenues +12% growth +170bps 1 underlying margin 2 Sustained strong first quarter progress through the first half Good revenue growth helped generate a strong improvement in margins 1. Defined as base business revenue growth 2. Defined as base business underlying operating margin excluding BIC

31 Europe of group revenue 18% revenues -5% growth -310bps 1 underlying margin 2 Markets in Europe remained challenging Some improvements in the half, but remains a major cause for concern Acceleration of restructuring through management and organisational changes with an additional cost of 25m Central 52m total costs in first half down 9m (reported currency) Central costs reduced reflecting VIA initiatives implemented in 2008 Benefits from VIA initiatives are weighted to the first half 1. Defined as base business revenue growth 2. Defined as base business underlying operating margin excluding BIC

32 Technical guidance: 2009 update Vision into Action restructuring spend expected to be around 550m up from 450m due to: 75m 25m Increased costs as a result of sustained Sterling weakness Provisions on redundant properties increased to reflect property market deterioration Restructuring of European business 40m of the additional money should be charged this year 2009 Vision into Action restructuring now expected at 160m Period end net debt is 1.8bn reflecting higher levels of working capital 32

33 Financial highlights Good progress in revenue, market shares and margin Progress driven by the successful implementation of our Vision into Action business plan Strengthened financial position; Issuance of a 300m bond in March Receipt of proceeds for Australia Beverages Renewal of 450m banking facility for three years Strong financial performance in first half of

34 Todd Stitzer Chief Executive Officer Strategic Update and Outlook 34

35 First half category trends Chocolate Gum Candy Benefiting from a strong stay at home trend Mainstream benefiting from trading down Affordable treats and gifts for the consumer Greater impact from economic downturn In certain markets, consumer behaviour changed dramatically Innovation and marketing underpinning share gains and helping market growth Performing well in traditional indulgent candies Improving in the cough/cold segment 35

36 Confectionery market growth E 2010E 2011E Average developed market growth 4% 4% 3% 2% 2% 3% Average emerging market growth 9% 10% 12% 10% 10% 9% Cadbury s markets continue to show resilience Average of Cadbury s top 5 developed and top 5 emerging markets. Growth rates taken from Euromonitor

37 First half market share performance 50% 25% Declining Market Share Growing 25% 37

38 Building innovation momentum to capture share Large bags 15m since April launch Fun on the Farm Sub-brand growth +14% 38

39 Building innovation momentum to capture share Chiclets Sugar-free gum market up 500bps Bubbaloo Cadbury India bubblegum share 10% Trident Trident/Beldent franchise up 23% 39

40 Chocolate Market Cadbury % E Average +5.6% +4.6% Developed markets account for over 70% of Cadbury revenue Source: Euromonitor and company estimates, average for

41 Chocolate market remains positive for Cadbury s business Cadbury market position* Growth initiatives UK #1 Fairtrade, innovations in CDM and countlines Australia #1 CDM relaunch 9 major markets India Ireland Poland South Africa #1 #1 #1 #1 Chocolate innovations Snack bars Chocolate innovations Wedel relaunch Efficiencies Canada #3 Various renovations New Zealand #1 CDM relaunch France #6 Drive share of new channels * Euromonitor

42 Fairtrade First major confectionery brand to go Fairtrade Builds brand equity Ensures security of supply of cocoa Will benefit several thousand farmers and their communities

43 Gum Market Cadbury % E Average +11.2% +6.8% Innovation driven strong out-performance Source: Euromonitor and company estimates, average for

44 Gum market outlook increasingly positive Cadbury market position* Growth initiatives US #2 Platform innovation core brand renovations and new products Emerging Developed France Japan Spain Mexico Brazil Turkey #1 #2 #2 #1 #1 #1 Continued roll-out of new platforms Continued roll-out of new platforms Various renovations and extensions Leverage new innovations Various platform extensions Continued roll-out of new platforms Platform extensions Renovation and platform extensions Russia #2 Invest behind stable route to market * Euromonitor

45 Trident Layers New platform in gum - initially targeted at the US Positive response from the trade In-store launch in September 45

46 Candy 7 6 % Market Cadbury Average +3.6% +3.2% E Momentum building after period of SKU rationalisation Source: Euromonitor and company estimates, average for

47 Well positioned brands to capitalise on Candy market growth Cadbury market position* Growth initiatives US Other Halls Mexico Brazil Venezuela Spain Canada Traditional bags Indulgent #1 Halls Creamy Innovation New flavours Additional renovation and new formats Roll-out of The National Confectionery Co. Extend strong brands, personalise week status Eclairs renovation in India and China * Euromonitor

48 Halls Creamy Double-digit growth in the first half Excellent trade buy-in Encouraging repeat sales 280 bps share gain in Brazil

49 Recent growth has been price driven Up 5% Up 6% Up 7% Up 7% Up 4% 5% price mix 6% price mix 6% price mix H Price Mix Volume Price increases successfully recovered cost of raw materials figures not like for like 49

50 Continuing to invest in marketing and innovation Marketing spend Science & Technology Innovation % of NSV 11 % of NSV 1.5 Target 1.5% % of NSV Target 15% Ongoing investment is driving volume growth 50

51 Need to continue momentum momentum in innovation + momentum in marketing + momentum in market share Well positioned to generate revenue growth in the future 51

52 Improving efficiency Efficiency benefits of Vision into Action will come through Supply chain projects set to deliver expected savings in 2010 and 2011 Central costs under control Well on track with SG&A savings Sustaining our investments in growth opportunities Further important initiatives in Europe Generate greater efficiencies to offset sustained economic weakness 52

53 Investor seminars Provide more insights into a pure-play confectionery business Our businesses Our categories Our change programmes Provide exposure to more of the Cadbury management First seminar 11 November Britain and Ireland Hosted by Trevor Bond and his leadership team 53

54 Positive outlook 2009 Strong first half performance Expect to deliver against forecasts Looking beyond 2009 On track to deliver Vision into Action Good revenue growth of 4-6% per annum Mid-teens margins by

55 Except for historical information and discussions contained herein, statements contained in these materials may constitute forward looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. Forward looking statements are generally identifiable by the fact that they do not relate only to historical or current facts or by the use of the words may, will, should, plan, expect, anticipate, estimate, believe, intend, project, goal or target or the negative of these words or other variations on these words or comparable terminology. Forward looking statements involve a number of known and unknown risks, uncertainties and other factors that could cause our or our industry s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward looking statements. These forward looking statements are based on numerous assumptions regarding the present and future strategies of each business and the environment in which they will operate in the future. In evaluating forward looking statements, you should consider general economic conditions in the markets in which we operate, as well as the risk factors outlined in our Form 20-F filed with the US Securities and Exchange Commission and posted on Cadbury plc s website These materials should be viewed in conjunction with our periodic half yearly and annual reports and other filings filed with or furnished to the Securities and Exchange Commission, copies of which are available from Cadbury plc, Cadbury House, Uxbridge Business Park, Sanderson Road, Uxbridge UB8 1DH, UK and from the Securities and Exchange Commission s website at Cadbury plc does not undertake publicly to update or revise any forward looking statement that may be made in these materials, whether as a result of new information, future events or otherwise. All subsequent oral or written forward-looking statements attributable to Cadbury plc or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. 55

56 Supplementary Information 56

57 Sales analysis seven business basis Half year ( m) 2008 Base Business M&A FX effects 2009 B&I (9) MEA Europe 496 (26) North America 553 (15) South America (6) 213 Asia Pacific Central 4 (1) Continuing Group 2, (9) 240 2,767 57

58 Underlying profit from operations seven business basis Half year ( m) 2008 Base Business M&A FX effects 2009 B&I MEA Europe 35 (13) North America South America (3) 42 Asia Pacific Central (61) 12 - (3) (52) Continuing Group

59 Input cost increases m 2008 H1 average 2009 H1 average % Change Current* Commodities: rising input costs World sugar, c/lb % 19.4 Cocoa, /tonne 1,306 1,701 30% 1,819 Oil, $/barrel % 71 Milk, p/litre % price realisation should offset input cost inflation * Source: Bloomberg as at 23 July

60 Non-trading items Half year ( m) Sale of intellectual property 1 - Disposal of non-core businesses - (6) Reported 1 (6) 60

61 EPS drivers Continuing ops UEPS pro forma p* Base business growth 1.4p 12.5% Change in number of shares (0.1)p (0.9)% Foreign exchange 1.4p 12.5% p 24.1% * Assumes share consolidation relating to the demerger was in place for all of 2008

62 Restructuring costs Half year ( m) Restructuring Restructuring - Vision into Action (91) (48) Separation and creation of standalone confectionery costs Gumlink (1) - (14) (3) Acquisition integration costs Total (13) (105) (5) (70) 62

63 Net financing m Net interest (57) (45) Pension (charge) credit (3) 16 Underlying net financing charge (60) (29) IAS 39 adjustments (22) 21 Interest on tax and other provisions (10) - Statutory net financing cost (92) (8) 63

64 Balance sheet Half year ( m) Non-current assets 5,595 5,137 Net working capital Assets held for sale less associated liabilities 2 3 Net retirement benefit liability (482) (18) Provisions and deferred tax liabilities (552) (458) Net borrowings continuing group (1,763) (1,700) Net assets 3,087 3,015 Ordinary shareholders funds 3,080 3,006 Minority interests 7 9 Total capital employed 3,087 3,015 64

65 Cash flow Half Year ( m) Profit from operations* Restructuring Depreciation Other items Working capital Interest Tax Cash generated from operations Capital expenditure Pension funding Free cash outflow 2009 con t ops 201 (3) (213) (66) (102) (53) (163) - (216) 2008 con t ops (129) (63) (62) 3 (148) 18 (127) * Profit from operations before intangibles amortisation, goodwill impairment, restructuring, non-trading items and IAS39 adjustment

66 Borrowing profile Half year Net debt maturity profile Less than 1 year 20% 37% 1-3 years 9% 8% More than 3 years 71% 55% Fixed rate debt: % total net debt 53% 71% Average interest rate 5.3% 4.6% Group average interest rate 5.6% 5.5% 66

67 Debt profile Issued 300m 5-year bond at Maturity profile 5.375% in March 2009; Refinanced 450m revolving credit facility matures June 2012; After repayment of 600m bond in June 2009, 1.4bn of long term debt; Value of debt instruments 1,760m 370m 1040m 350m Total 0-1yrs 1-5 yrs 6-10 yrs Strong balance sheet with good long-term financing 67

68 Sales, profits and borrowings by currency Half year ( m) 2009 % Sales generated in: US dollars % Sterling % Euro % Australian dollars 203 7% Other 1,282 47% Underlying operating profit* generated in: US dollars 74 23% Sterling (5) (2)% Euro 44 14% Australian dollars 31 10% Other % Net borrowings before currency swaps held in: US dollars 1,119 64% Sterling % Euro (89) (5)% Other 112 6% * Profit from operations before intangibles amortisation, restructuring, non-trading items and IAS39 adjustment. Excludes American and Australian beverages. 68

69 Exchange rates Rate vs Sterling 2008 average 2009 average % change US $ (19)% Canadian $ (8)% Euro (11)% Australian $ (5)% South African Rand (10)% Brazilian Real (2)% Mexican Peso (1)% 69

70 Technical guidance: 2009 update Foreign exchange Restructuring Underlying interest rate Post retirement benefits Underlying tax rate Capital expenditure 2009 Guidance NSV ~ +5% UOP ~ +6% ~ 220m ~ 6% 6m charge in % m Comment Assumes current exchange rates remain unchanged for the balance of the year Includes 160m related to Vision into Action Interest rate expected to reduce in 2009, reflecting improved financing spreads Reflects a fall in asset values plus changes in actuarial assumptions at the end of 2008 used to derive the non-cash P&L charge under IAS19-33m unfavourable versus the prior year Unchanged Includes 100m related to Vision into Action 70