Mondelez extracted $130m in dividends before quitting Dunedin
Mondelez New Zealand Investments pulled out $130 million of dividends from its New Zealand business, more than twice the profits its generated is six years of ownership, before going ahead with shutting down the Cadbury factory in Dunedin.
The local unit of the US food group shipped $25 million to its parent in calendar 2016, when it reported a profit of $7.6 million, down from $9.2 million a year earlier, financial statements lodged with the Companies Office show. The New Zealand entity increased revenue 3.8 percent to $302.5 million, although a higher cost of goods squeezed gross margins to 18.4 percent from 20.3 percent a year earlier.
The latest dividend adds to $105 million in dividends paid in previous years.
Earlier this year, Mondelez announced plans to close the Dunedin factory, laying off 350 staff in the process, and shifting manufacturing to Australia where it was closer to the Kiwi facility's main customer.
Kraft bought the factory in 2010 as part of an 11.9 billion pound takeover of the global Cadbury group, of which the New Zealand assets were worth some $200 million. Kraft later spun out its global snacks business and renamed it Mondelez. In the first year of owning it, Mondelez injected about $80 million of new capital into the New Zealand entity.
Since then, Mondelez's New Zealand operations have become closer to the global group, with almost 31 percent of its sales in 2016 going to related parties, up from just 21 percent in 2011, and generating profits totalling $47.4 million, almost a third of what's been paid out in dividends, and leaving the holding company with equity of $6.4 million as at Dec. 31.
The New Zealand holding company also accrued and paid about $43 million of interest on a related party loan of $120 million between 2011 and 2016. Royalties totalled $47.4 million and service fees and marketing rebates totalled $37.2 million until 2015, with Mondelez bundling those fees with inventory purchases in the latest accounts.
Mondelez expects to close the Dunedin site and sell the property next year, which it anticipates will see it impair the $53.3 million value attached to its property, plant and equipment as at Dec. 31. Restructuring costs are expected to be incurred from the closure will be incurred in the 2017 statements, the company said.
The candy maker had already cut its wage bill, with staff remuneration down to $34.5 million in 2016 from $41.1 million a year earlier. Key management and director remuneration fell to $661,000 from $829,000 in 2015.
Separately Mondelez has announced some $3 million will be spent revamping the Cadbury World visitors' centre that will remain after the factory is shuttered.