The Week Ahead: Cadbury's results boost defence against bid

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The Independent Online

Cadbury will today post its formal response to the £10.1bn takeover bid by Kraft Foods, alongside its pre-close trading update. The Dairy Milk maker will make a robust case for its strategy as a standalone confectionery specialist. Cadbury's management will cite improved savings from its Vision into Action programme, continued growth in volumes and margins, and why its brands, particularly in emerging markets, are a better place for investors to keep their shares rather than being absorbed into what the company calls the "low growth conglomerate" of Kraft. The confectioner lambasted Kraft's offer of 0.2589 of its shares and 300p in cash for each Cadbury share as "derisory" and "unattractive" when it was made on 9 November.

Analysts at Jefferies International forecast that Cadbury will deliver a full-year 180 basis points of improvement in margins in 2009, compared with its expectation of 70 bps before the summer. It also expects to see evidence of a "fight back" from its US gum business against its rivals. In trading on Friday afternoon, Kraft's bid for Cadbury was worth 724p, but the City believes that the maker of Philadelphia cheese will have to bid more than 800p.

Hershey, the US chocolate maker, and Ferrero, the Italian firm, are other potential suitors, and they have until 2 February to make a counter bid.

TodaY: Panmure Gordon is looking forward to a positive update from Whitbread, the hospitality group which is due to issue an interim management statement today. The company, which owns Costa Coffee and the Premier Inn hotels chain, is expected to report further improvement in hotel trading, with the decline in like-for-like revenues per available room moderating as the year progresses. "We believe Premier Inn's market positioning leaves it well placed to benefit from the UK hotel recovery whilst the move to dynamic pricing should enable to group to capture significantly more of the price sensitive leisure market," Panmure said.

Results/updates: RWS Holdings, Whitbread, Cadbury.

TOMORROW: KBC Peel Hunt expects good things from Carpetright, the carpet retailer which is due to issue interim results tomorrow. The broker said that, given recent gains in like-for-like sales, the company is well placed to "deliver record UK sales this year". "Carpetright sales improved sharply over [the second quarter], reflecting the demise of Allied Carpets and the UK business entering the third quarter with double-digit like-for-like sales growth," KBC said, adding that the opportunity to grow market share, coupled with new contracts to supply both the new-build housing market and the domestic insurance market, "provide three major revenue drivers before we consider the potential for economic recovery".

Also tomorrow, International Personal Finance is due to issue a pre-close update. Numis expects the company to report good growth, with improving trends in impairments. "Given that the fourth quarter will not have ended we do no expect a pre-tax profit number but do expect guidance that Mexico is still in line to report its first annual profit in 2009," the broker said. "We also expect guidance that profitability for 2008 will be in line or better than our top of range forecast of £61.6m."

Results/updates: Scott Wilson, Go Ahead, Renovo, International Personal Finance, Carpetright.

WEDNESDAY: Punch Taverns' interim management statement may prove a catalyst for the share price, according to Credit Suisse. The broker expects the update to offer "positive news" and show signs of improvement, saying that it may lure buyers "despite what seems to be a low level of investor appetite for higher risk equities at this point in the year".

Results/updates: Petrofac, Drax, Kesa Electricals, Punch Taverns.

THURSDAY: Results/updates: Arriva, McBride, Wood Group, Senior, Travis Perkins.

FRIDAY: Keller, the ground engineering specialist, is due to issue a pre-close update, and Numis expects the company to confirm that it is on track to meet the upper end of analyst forecasts for the full year. "The group will report that infrastructure and public projects continue to feed through but the private construction market remains difficult," the broker said.

Results/updates: Axis Shield, Aggreko, Keller.