Kraft results boost Cadbury bid chances

KRAFT Foods last night posted a better than expected quarterly profit – boosting its chances of a successful bid for Cadbury.The world’s second largest food company reported earnings of $826m (£502m) or 55 cents a share, in the third quarter.Analysts on average forecast 48 cents a share at Kraft, whose operating income jumped 38.7 per cent to $1.4m.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.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. Under a UK takeover ruling it now has until 9 November to submit a formal offer.Kraft chairman and chief executive Irene Rosenfeld said: “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.“As a result, we expect to deliver higher earnings and cash flow in 2009, while further increasing our brand investments to drive future growth.”Rosenfeld added on the pursuit of Cadbury: “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.”A purchase would add Cadbury’s Dairy Milk chocolate to well-known Kraft products including Philadelphia cream cheese and Kool-Aid.