1 2 0 0 9 Half Year Results 29 July 2009 2 Roger Carr Chairman - PDF document

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2 0 0 9 Half Year Results 29 July 2009 2

Roger Carr Chairman 3

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

Todd Stitzer Chief Executive Officer First Half Highlights 5

First half highlights Good financial perform ance • 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

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

Drivers of revenue grow th and m argin im provem ent • Emerging markets • UK market Grow th • Chocolate category • Gum and candy recovery • Pricing power Efficiency 8

Em erging m arket grow th Em erging m arket contribution to revenue + 40% + 31% 4 % 1 + 60% + 69% FY 2008 H1 2009 Emerging markets Developed markets 9 1. Overall revenue growth in period

Case study I ndia • Revenue up 20% • Market share up 220bps I nternet page view s 7 m Consum er preferred brands & products 10

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

UK m arket grow th 2 0 0 9 revenue grow th Market performance • Category grew 2% + 1 7 % + 1 4 % + 1 2 % • Cadbury grew 14% • Market share up 210bps Q1 Q2 H1 £ 5 0 m + 2 3 0 bps revenue share gain from new in im pulse products in first half Category focus & innovation 12

An aw ard w inning year Custom er service level 9 8 .4 % 13

Strong chocolate perform ance Revenue grow th by quarter + 13% + 10% + 7% Gum Candy + 2% + 2% 0% 0% -2% -2% Q1 Q2 H1 Consum er preferred brands & products 14

Re-launch of Cadbury Dairy Milk in ANZ • New format • Excellent acceptance levels • Supply chain efficiencies • Incremental improvements to profitability Chocolate share* + 1 2 0 bps 15 * Nielsen: 4 weeks to end of May in Australia

I m proving trend in gum and candy + 1 6 % globally in Q2 + 1 0 % in US in + 2 3 % Q2 in H1 + 1 5 % in Q2 + 6 % globally in Q2 16 Percentages are year on year growth

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

Drivers of revenue grow th and m argin im provem ent • Emerging markets • UK market Grow th • Chocolate category • Gum and candy recovery • Pricing power • Vision into Action projects Efficiency • Effective cost control with supply chain and SG&A 18

I m pact of efficiency SG&A 1 0 0 % of expected annual savings • Reduced head office costs Central costs, SG&A and outsourcing • SG&A cost savings 5 0 • De-layered organisation Supply chain reconfiguration 0 Supply Chain 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 • Closure of gum facility in Barcelona • Integration of Turkish gum manufacturing 19

Perform ance driven, values led Sustainability com m itm ents 20

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

Andrew Bonfield Chief Financial Officer Operational and Financial Review 22

Grow th drivers: price, volum e & m ix + 1% volume Portfolio Rationalisation Destocking + 6% + 6% 4% price mix price mix growth FY 2 0 0 8 H1 2 0 0 9 23

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

Operating m argin track Detailed drivers of m argin progression 1 1 .5 % + 35 bps + 100 bps 1 1 .2 % -25 bps + 90 bps 9 .7 % -20 bps 1 4 5 bps im provem ent at constant currencies HY 2008 Gross Marketing Vision into Inflation Constant Foreign H1 2009 Margin Action on SG&A Currency Exchange Savings 25

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 m argin increase 8 0 -1 0 0 bps 26

Revenue and profit grow th Continuing Operations Half Year (£m) 2009 % % Constant Reported currency Revenue 2,767 13% 4% Underlying profit from operations 319 35% 19% margin 11.5% + 180 bps + 145 bps Pension charge (3) Net interest (57) Underlying profit before tax 262 24% 11% Underlying profit after tax 189 26% 13% Pro forma EPS 13.9p 24% 12% 27

Britain & I reland of group revenue underlying 2 3 % + 1 2 % + 2 2 0 bps growth 1 margin 2 revenues • 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 of group revenue underlying 7 % + 1 1 % + 4 0 0 bps growth 1 margin 2 revenues • 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

Asia of group revenue underlying 7 % + 1 2 % + 3 3 0 bps growth 1 margin 2 revenues • 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 underlying 1 3 % + 3 % + 2 0 bps growth 1 margin 2 revenues • 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

North Am erica of group revenue underlying 2 1 % -3 % + 1 1 0 bps growth 1 margin 2 revenues • 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 Am erica of group revenue underlying 8 % + 1 2 % + 1 7 0 bps growth 1 margin 2 revenues • 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

Europe of group revenue underlying 1 8 % -5 % -3 1 0 bps growth 1 margin 2 revenues • 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 down £ 9 m total costs £ 5 2 m (reported currency) in first half • 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