Cadbury accounts leave a sour taste
Revelations that Cadbury’s owner, Mondelez International, extracted more dividends than it made in profits as it prepared to close its Dunedin factory have sparked outrage and questions about good faith.
The accounts of Mondelez New Zealand Investments available on the Companies Office website show it extracted $130 million over six years.
For example, in 2016 the company made a profit after tax of $7.6m on revenue of $302m, but it took $25m in dividends.
‘‘I’m horrified at the extent of it. It makes a mockery of the arguments they used for closing the factory as essentially uneconomic to maintain,’’ Dunedin South MP Clare Curran said.
‘‘It raises questions about good faith with regard to the working party I’m involved in about leasing out production of the iconic Kiwi Pineapple Lumps and Jaffas after the Dunedin factory closes next year with the loss of 350 jobs.
‘‘If they’re not telling the full story about the factory, how can we maintain that good faith relationship at the next meeting on May 19? The accounts show a well-performing, agile factory in Dunedin is at the mercy of a multinational with other agendas.’’
She predicted that Mondelez would do the same with the other two remaining Pacific Rim Cadbury factories, one of them in Australia.
Dunedin North MP David Clark said the next big test would be how well the company supported its workers when helping them find other employment.
E tu union organiser Chas Muir said the company’s accounts underscored the behaviour of international corporations.
‘‘Cadbury in Dunedin has been a cash cow. They’ve milked it dry, drained the blood and now they’re selling the carcass. It’s happening in Chicago, Toronto, Montreal and Philadelphia,’’ Muir said.
Deloitte partner Mike Horne said there were various ways a company could extract more dividends than it made in profits over a short-term period.
Without having studied the accounts, he said it was possible Mondelez’s initial $80m investment when it took over six years ago might not have been used, allowing for reduced depreciation and greater cash reserves for dividends.
A range of other complex mechanisms, such as management agreement payments to the parent company, might also be used to extract cash, Horne said.
Mondelez International said the underlying reasons for the decision to close the factory did not relate to the financial performance of the wider New Zealand business.
‘‘The decision to end our local operation was a very difficult one which related to the location of the factory in relation to its main market, low volume and complex product portfolio which made the site challenging to operate in a highly competitive international industry,’’ the company said.
‘‘We are committed to New Zealand and will continue to employ over 130 people across the country.’’
"It makes a mockery of the arguments they used for closing the factory."