After announcing disappointing results in February 2007, Cadbury Schweppes was reported to be looking to find around £300 million of yearly cost savings to bolster its confectionary profits. The maker of Snapple and Trebor reported full-year pre-tax profits down 10 per cent at £738m, below market expectations, as impairment charges in Nigeria, a product recall in the UK and restructuring costs lopped £178m off earnings.
In March, the organisation unveiled plans to split its sweets and drinks units, fueling speculation of a £7 billion sale of its beverages business. The move was regarded by analysts as Cadbury Schweppes responding to pressure from investors led by US billionaire Nelson Peltz, to sell or spin off its American drinks unit. IT has also played a part in the company’s recent woes. According to the chief executive of the UK arm of Cadbury Schweppes, Tod Stitzer, IT problems contributed to a £12m deficit in profits. There were manufacturing and supply chain issues relating to the implementation of Probe, a £200m, four-year, global IT programme built around a SAP enterprise resource planning system.
The company entered 2006 with higher stocks and inventory than normal and took the decision to discount. Stitzer says that these problems have now been resolved.
The Probe project is intended to build an integrated system for sales, finance, planning, manufacturing, distribution, marketing and purchasing.