Shares in Cadbury Schweppes fell by more than 5% this morning (19 February) despite the UK firm reporting an "excellent" year from its core confectionery business.

Cadbury, the world's largest confectioner, booked a 4% rise in underlying profits to GBP1.1bn (US$2.1bn) for 2007, although the result excluded currency fluctuations. When exchange rate movements were included, profits dipped 2%.

Revenue rose 11% to GBP7.9bn on a constant-currency basis, with sales driven by strong Trident gum sales and a recovery for Cadbury Dairy Milk in the UK.

"These results reflect the benefits of restructuring initiatives undertaken between 2003 and 2007 and continued investment behind our brands," CEO Todd Stitzer said.

However, Cadbury was less certain about its prospects for 2008. Stitzer said the company, which has faced criticism of its performance from activist investor Nelson Peltz, expects "meaningful margin progression" this year but still sounded a warning on commodity costs.

"Commodity input costs are expected to be 5-6% higher in 2008 and we will seek to offset these increases through price rises," Stitzer said.

Cadbury said the demerger of its drinks operations in the US from its confectionery business would be complete during the second quarter of the year.

Roger Carr will become chairman of Cadbury, the stand-alone confectionery company. Wayne Sanders, former president and CEO of Kimberley-Clark, will be chairman of drinks business Dr Pepper Snapple Group.