Cadbury's takes the knife to 5,500 jobs

The chocolates and drinks group Cadbury Schweppes is cutting about 5,500 jobs and nearly 30 factories to raise cash for more marketing, the chief executive, Todd Stitzer, told investors in London yesterday.

Mr Stitzer will repeat the message today in New York, where he may receive a more hostile reception, as most of the job losses and factory closures will be in the US.

The company would not spell out the precise figures, nor would it say where the cuts would be. It expects to save £400m a year by shedding 10 per cent of the 55,500-strong workforce and closing about 20 per cent of its 133 factories. The changes are expected to cost £900m over the next four years.

It is unlikely many more jobs or factories will go in the UK, where rationalisation of the merged Cadbury and Trebor Basset operations is under way with the loss of 500 jobs. Cadbury has previously said that in the next 15 months it would close two sweets factories, Halls in Manchester and Trebor in Chesterfield. Its flagship Birmingham factory is not expected to be affected.

About a third of the money saved will be spent on marketing and innovation, dubbed the "smart variety" initiative by Mr Stitzer.

Mr Stitzer said Cadbury had been transformed into a worldwide group with a wider portfolio of confectionery and drinks. However, a large number of acquisitions and disposals had created "a complex organisational structure for a business of our size and a disproportionate cost base".

The acquisition of Adams chewing gum in the US in March, the largest deal that Cadbury has struck at $4.2bn (£2.5bn), brought to a head concerns over duplication.

In February Cadbury restructured its nine operating units into five and separated management of the sales side from the supply chain.

Mr Stitzer said Cadbury had "a powerful portfolio of leading regional and local brands in our chosen markets". He said underlying operating profit margins would rise by a half to three-quarters of a percentage point each year until 2007 and net sales would grow at an annual rate of 3-5 per cent, under the plans. Free cash flow would total £1.5bn over the next four years.

Mr Stitzer reiterated that second-half trading would be in line with the first half.

The shares rose 4.5p to 396p. They hit 300p in March.