Cadbury Net Gains 46% on Sales Growth MARKETPLACE By Bloomberg
Posted on: Wednesday, 22 February 2006, 12:00 CST
By Hugo Miller
Cadbury Schweppes, the maker of Dr Pepper soda and Dairy Milk chocolate, said Tuesday that 2005 earnings increased 46 percent, helped by the disposal of less profitable brands and the fastest revenue growth in more than a decade.
Net income rose to l765 million, or $1.33 billion, from l525 million a year earlier, the company said. Sales advanced 7 percent, to l6.51 billion.
The company is using money from the $2.2 billion sale last year of Cadbury's European soft-drinks unit and brands like Grandma's Molasses to invest in faster-growing gum and diet-soda markets. The company is developing less sugary drinks like fruit-flavored 7Up Plus with added calcium to narrow the gap with its larger rivals PepsiCo and Coca-Cola.
"The U.S. seems to be where a lot of the growth is," said Brian Tora, chief investment officer at Gerrard Group. "They do seem to be doing rather better on the confectionery side than on the beverage side."
Sales of beverages in the Americas rose 7 percent, to l1.78 billion, while confectionery revenue in the region gained 13 percent, to l1.23 billion, helped by a 22 percent jump in sales of its Trident gum brand, Cadbury said. European drinks and food sales added 5 percent to l2.33 billion as revenue from its Green & Black's organic chocolate business gained 49 percent.
The company said its share of the U.S. soda market rose 0.4 percentage point to 17 percent last year. Cadbury will focus its soft-drink business on the United States and Australia, where it has "very defendable and sustainable positions," Todd Stitzer, the company's chief executive, said during an interview.
Shares of Cadbury rose 14 pence to finish at 574 pence in London. Cadbury is developing new gum varieties in the United States and emerging markets including South Africa to broaden confectionery sales beyond chocolate. Cadbury this month announced the l33 million purchase of the gum unit of Dan Products (Botswana) to expand in South Africa, two months after announcing plans for a l70 million gum factory in Poland.
Source: International Herald Tribune
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