Cadbury optimistic after profits rise

Confectionery group Cadbury Schweppes today benefited from a surge in demand for diet soft drinks in the United States as it posted results in line with expectations.

The company, which makes Dairy Milk and Dr Pepper, reported a 2% rise in first half underlying profits to £371m (€557m) in the 24 weeks to June 13 and said it remained “cautiously optimistic” about the full year.

In the US, a strong performance by carbonated drinks was driven by Dr Pepper, which increased volumes by 3% during the period. Overall diet soft drinks volumes rose by 23%, including strong growth in Diet Dr Pepper.

There was also encouragement in the UK, where the relaunch of its Dairy Milk range led to double-digit growth in sales of the chocolate bars. Cadbury’s overhaul of the range last year saw products such as Crunchie, Fruit & Nut and Caramel more closely tied together under the same branding.

The company’s UK business – Cadbury Trebor Bassett – saw a 3% increase in sales and retained a market share of 31% in the first half. Cadbury has eight factories and 3,000 staff in the UK.

Today’s profits increase would have been 9% without currency fluctuations, although restructuring costs did result in a 10% fall in bottom-line profits to £265m (€398m).

As part of the changes at the group, Cadbury is looking to save £400m (€601m) through its Fuel for Growth cost reduction programme.

The plan, which runs to 2007, involves closing an estimated 20% of the company’s 133 factories worldwide and reducing its 55,000-strong workforce by 10%.

Chief executive Todd Stitzer said today that Fuel for Growth was delivering as expected.

He added: “Although we have a number of challenging integration projects in the second half, we remain cautiously optimistic about the outcome for the full year and expect to deliver results within our goal ranges.”

These projects include the integration of the recently-acquired Adams gum and medicated sweet business.