Kraft results boost Cadbury bid chances

KRAFT Foods last night posted a better than expected quarterly profit &ndash; boosting its chances of a successful bid for Cadbury.<br /><br />The world&rsquo;s second largest food company reported earnings of $826m (&pound;502m) or 55 cents a share, in the third quarter.<br /><br />Analysts on average forecast 48 cents a share at Kraft, whose operating income jumped 38.7 per cent to $1.4m.<br /><br />However, slower sales and lower prices on food cut its third-quarter profit nearly 40 per cent from a year earlier. Revenue fell nearly six per cent to $9.8bn.<br /><br />The company has already seen a $16.7bn bid for British chocolate maker Cadbury turned down but is hoping the latest figures will help a renewed bid.<br /><br />&nbsp;Under a UK takeover ruling it now has until 9 November to submit a formal offer.<br /><br />Kraft chairman and chief executive Irene Rosenfeld said: &ldquo;We continue to build our operating and financial momentum despite the difficult consumer environment margin and cash flow trends are strengthening as we successfully execute our growth plan.<br /><br />&ldquo;As a result, we expect to deliver higher earnings and cash flow in 2009, while further increasing our brand investments to drive future growth.&rdquo;<br /><br />Rosenfeld added on the pursuit of Cadbury: &ldquo;We remain interested but will maintain a disciplined approach. Our criteria include accretion to earnings in the second year, delivering a return on investment well in excess of our cost of capital, and maintaining both our investment grade credit rating and our dividend.&rdquo;<br /><br />A purchase would add Cadbury&rsquo;s Dairy Milk chocolate to well-known Kraft products including Philadelphia cream cheese and Kool-Aid.