Strong Trading at Cadbury Grows Profits By 6.1 Per Cent As Investment is Boosted

CHOCOLATE and soft drinks group Cadbury Schweppes unwrapped a 6.1 per cent increase in first-half net profits yesterday, driven by strong sales, and said it expects to meet its full-year targets.

Cadbury, the world’s biggest confectioner with brands such as Dr Pepper, Dairy Milk chocolate, Halls cough drops and Trident sugar- free gum, said net profit for the 24 weeks ended June 19 came to GBP 244 million, up from GBP 230m. Sales increased to GBP 3.13 billion from GBP 2.95bn.

“Although the environment is likely to remain challenging, we will continue to increase investment and expect to deliver within our goal ranges for the full year,” said chief executive Todd Stitzer.

Stitzer said the strong start to the year was largely due to increased investment in growth and a focus on innovation. The company recently revamped its flagship Dairy Milk brand by integrating it with other brands such as Caramel, leading to a 9 per cent rise in brand sales.

The company’s UK market share increased to 31.3 per cent, but Stitzer noted retail markets in continental Europe were weaker, particularly in France where food prices were falling.

The group’s drinks business increased sales by 4 per cent on a like-for-like basis, with continued market share gains in the US and strong growth in Mexico and Australia.

Finance director Ken Hanna declined to comment on speculation that the company may be considering a sale of its European soft drinks business. The firm has been pushing a cost-cutting “Fuel for Growth” programme since mid-2003 to respond to tough market conditions and try improve growth. Under the plan, it has closed 10 per cent of its 133 factories worldwide and reduced its work force by 10 per cent. Cadbury employs more than 50,000 people worldwide, with about 7,000 in Britain.

Increased competition in the US beverage market from Coca-Cola and Pepsi and high oil costs and political uncertainties in developing markets will also have a lasting impact. Shares rose 1 per cent to 547.5p.