Chocolate maker Cadbury thriving in recession

Continued strong demand for chocolate in the recession helped Dairy Milk owner Cadbury report improved trading for April and May today.

The UK company said it remained on track for full-year sales growth at the lower end of its 4% to 6% range, thanks to the stronger early summer performance.

Britain's appetite for chocolate remained resilient, while sales also picked up in other areas, such as North America and Japan, according to the group.

Cadbury said annual results may be held back by "very challenging" conditions across Europe, but is hoping for better second-half sales as it prepares for new product launches.

Cadbury said promotional efforts surrounding the launches - across chocolate, gum and candy - may impact profit margins in the second half.

However, it is still looking to achieve annual margin growth in the "mid-teens" by 2011.

The group reported a slowdown in sales across its global business in the first quarter to 2% growth - its lowest quarterly sales result for three years.

Falling consumer demand and trade de-stocking across Europe and North America left sales in those regions down 8% and 6% respectively in the first three months of the year.

The UK has proved far more robust to the recession, which is helping offset the tougher conditions elsewhere, while Cadbury also said North America had since recovered from the de-stocking.

Recent launches, such as bite-sized Clusters share bags, have also bolstered second quarter sales.

Chief executive Todd Stitzer said: "Our early progress has continued into the second quarter with our businesses focused on delivering market share gains and efficiency improvements.

"As a result, we reconfirm our full year guidance."

It is also expecting a positive effect from the pound's recent recovery, which would increase net revenue by around 5% and underlying earnings by around 6% if exchange rates remain at current levels.

The impact on half-year figures could be even more marked, with a potential 10% boost for sales and 14% increase for earnings.

Cadbury last year returned to its roots as a pure confectionery company when it spun off its North America-based Dr Pepper drinks business.

The group has also been taking on the chewing gum industry head to head, with further efforts to push its Trident brand.

Cadbury also owns the Green & Black's chocolate brand and Halls lozenges.