Cadbury beats revenues target

Cadbury today said “good growth” from core brands including Dairy Milk had given it an edge over the rest of the UK confectionery market.

The company added that price rises in order to recoup higher costs and strong demand in emerging markets meant overall revenues for the first half of this year were likely to exceed the 4%-to-6% target previously set by the firm.

Cadbury shares opened more than 2% higher following the trading update.

In its domestic market, Cadbury said revenues growth was likely to be ahead of the wider confectionery market, which is 2% stronger so far this year.

It said: “The exit from some less profitable promotions has been more than offset by good growth in core brands, including Cadbury Dairy Milk.”

Cadbury is now focused on chocolate, sweets and gum after spinning off its drinks arm and dropping Schweppes from its name.

Chief executive Todd Stitzer said the new-look company had got off to a strong start, although he warned Cadbury will be up against stronger comparatives in the second half of the financial year.

He said: “Despite the challenging economic outlook and further increases in input costs in the second half, we are confident of a successful outcome for 2008.”

The company said like-for-like sales growth in the second quarter of the year was likely to be modestly higher than the 7% growth reported for the first quarter.

Prices rises have been implemented across the majority of its markets, following “significant” increases in commodity costs.

Cadbury revealed in May that it had lost ground to rivals over Easter after holding back seasonal price cuts, although it banked a 3% rise in first quarter UK revenues despite the hit.

Cadbury said at the time that sales growth was being driven by a recent concerted marketing push, led by last year’s advertisement featuring a gorilla drumming to Phil Collins and more recently an ad showing racing airport trucks.

Mr Stitzer also reported good progress on margins today, despite a further increase in marketing investment.

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