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UK confectionery and soft drinks maker Cadbury Schweppes has posted a 4% fall in first-half earnings as the weak US drinks market continues to impact profits.
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Cadbury, which makes Dairy Milk chocolate and Dr Pepper drinks, said underlying earnings per share were down to 12.4p (US$19.9) for the 24 weeks to 15 June, from 12.9p in the year-ago period. At constant currency rates, underlying earnings were up 2%.
Pre-tax profit was £294m, compared to £349m a year earlier, while total operating profit was down to £366m from £387m a year earlier.
Sales rose to £2.70bn, compared to £2.35bn a year earlier.
Todd Stitzer, CEO of Cadbury Schweppes, said the company sees a full-year performance broadly similar to that of the first half.
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By GlobalData“2003 is a transitional year for Cadbury Schweppes, as we consolidate 7 UP’s new distribution arrangements, integrate Adams and bed down our new organisational structure. These changes are focused on establishing a stronger and more sustainable platform for future growth,” Stitzer said.
“Our beverage business in the Americas did well to achieve like-for-like sales up 1% and underlying operating profit up 5% in a challenging market. The US carbonated soft drinks market has seen industry sales hit by extreme weather and weaker consumer demand. As expected, performance in the half was also impacted by changes to 7 UP’s distribution arrangements.
“Our European beverage business made a slow start to the year, mainly due to competitive market conditions and delayed integration benefits.
“Profits from our Asia Pacific region were impacted by weaker results from our operations in Australia, caused in part by the disruption resulting from a complex IT implementation, late last year.
“Adams, acquired on 31 March 2003, performed in line with expectations and the integration process is on track,” Stitzer added.
For the full year, Stitzer said the company expects “flat to modestly increased profits” from its Americas beverages, Americas confectionery and European beverages businesses, a continued strong performance from its Europe, Middle East and Africa business, with the exception of Dandy, and some modest improvement in Asia Pacific.
Cadbury also announced that David Kappler, chief financial officer, will retire in May 2004.
