Cadbury Schweppes, the world’s largest confectioner, this morning (1 August) reported a decline in first-half earnings as increased investment and rising costs weighed on margins.
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The company posted underlying pre-tax profits of GBP110m (US$222m) for the six months to the end of June, compared to GBP123m a year earlier.
Cadbury is in the process of spinning off its US drinks arm and classified that business as discontinued operations for the first half of 2007, making comparisons with 2006 difficult.
Underlying revenue – when stripping out currency fluctuations – rose 6% to GBP2.3bn, Cadbury said.
CEO Todd Stitzer said the growth in sales was due to Cadbury’s brand investment programme. Looking ahead to the second half of the year, he added: “We expect continued good revenue growth in the second half, while margins will be impacted by the combination of growth investment and higher input costs. Our team remains focused on delivering the unexploited potential of our portfolio.”
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By GlobalDataLast month, Cadbury outlined plans to restructure the company and focus on its core confectionery business. The programme involves the likely sale of its US drinks arm, which makes brands including Dr. Pepper and Snapple.
Last week, however, Cadbury said it is delaying the sale process for its US drinks business due to the current “extreme volatility” of the debt markets.
Cadbury Schweppes looked to calm rumours that it would have to abandon the multi-billion pound sale, however, by confirming that “interest in the business remains strong”.
