UK: Cadbury hit by difficult UK conditions
UK confectioner Cadbury Schweppes said today (26 October) that it expects revenue growth to be in the middle of its target range, after difficult conditions in the UK offset international growth.
The company said that trading in three of its four regions was in line with expectations at the interim results, however, Cadbury warned, the company's overall performance is being held back by poor sales volumes in the UK.
Cadbury said that it has continued to make good progress in American Beverages, American Confectionery and Asia Pacific, where growth has been driven by innovation and expansion into emerging markets. The company reported market share gains in US carbonates and US gum.
In EMEA, Cadbury said it has seen improvement in Western Europe, Turkey and the Middle East, while its performance in Russia has improved after a slow start to the year.
The company said that in the UK consumer confidence in the Cadbury brand was recovering following the salmonella scandal earlier this year. However, the UK confectionery market has been weaker than expected, with sales since the beginning of July down 5% year-on-year. Cadbury said that this was the consequence of unseasonably warm temperatures. "Nevertheless, our overall confectionery market share remains ahead year-on-year, and our chocolate market share is strengthening, driven by our recently launched innovations, Cadbury Melts and Flake Dark, which are performing strongly," the company said.
Like-for-like revenue growth excluding the UK is expected to come in at the top-end of Cadbury's goal range. However, including the UK group revenue is expected to be in the middle of its goal range.
Todd Stitzer, chief executive officer, said: "We're pleased that the majority of our businesses are performing well with innovation and emerging markets continuing to drive good growth in the Americas and Asia Pacific. Despite the impact of the product recall and weak confectionery market in the UK, we are encouraged by the recovery in consumer confidence and the successful launch of some new products. As we enter this very important trading period, overall the Group is in good shape and we expect to deliver revenue growth in the middle of our goal range."
Shares in the company declined by 1.28% throughout the day, dropping to GBP5.39 (US$10.17) at 4pm (GMT).
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