Cadbury owner faces accusations of asset stripping

It was reported yesterday that Mondelez New Zealand had paid dividends totalling $130 million to its parent in the past six years. Photo / Derek Flynn

Allegations of asset-stripping have been hurled at Mondelez after it was revealed the multinational owner of Dunedin's Cadbury factory stripped $130 million from its New Zealand business.

It was reported yesterday Mondelez New Zealand had paid dividends totalling $130 million to its parent in the past six years.

The dividends included $25million in each of the 2015 and 2016 calendar years, well above annual profits of $7.6million and $9.2million reported in the same period, the company's reports showed.

The last of the payments came just before Mondelez announced plans to close its Dunedin factory, with the loss of about 350 jobs, which was confirmed in March.

Deloitte private services partner Mike Horne, of Dunedin, said it was normal practice for business owners to take an annual dividend as a return on investment. The amount depended on capital injected and the value of the assets.

Just as employees received wages as a return on their labour, a business owner could expect a return, by way of a dividend, on the capital put into the business and the value of its asset base, Mr Horne said.

However, the sums involved, and the timing, prompted criticism from Etu food industry co-ordinator Chas Muir yesterday.

He said the sums amounted to asset-stripping, and highlighted the "corporate greed" of the company and its shareholders.

"They've taken millions and millions out of a very viable, successful business, taken it offshore to feed their shareholders, and actually, having drained all that they could out of this viable enterprise in Dunedin, now they're throwing it to the wolves, and 350 workers with it."

The "massive figures" highlighted the gap between an enterprise that sought to grow its business, compared with one which stripped and sold, he said.

"They are two different animals, and Mondelez unfortunately is the latter.

"It doesn't make good reading for the people of Dunedin, does it?"

Mondelez NZ was the offshoot of Mondelez International, the global snacks business spun off from multinational owner Kraft.

Kraft bought the global Cadbury group - including Dunedin's factory - in 2010, but its subsidiary, Mondelez, has since faced allegations of profiteering after closing Cadbury factories elsewhere.

Mondelez had also spent $80million upgrading the Dunedin factory, but earlier this year cited the factory's low volumes, costly product portfolio and distance from the Australian market as reasons for closing it.

A Mondelez International spokesman reiterated that yesterday, saying the reasons for closing the Dunedin factory "do 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 spokesman said.

"We are committed to New Zealand and will continue to employ over 130 people across the country and invest in hundreds of small, medium and large Kiwi businesses."

Craigs Investment Partners broker Peter McIntyre said the return on investment was the key consideration towards Mondelez getting a dividend.

"[However] it just goes to show how profitable it was for Mondelez to have Cadbury here," he said.