In a trading statement ahead of publication of its year-end results, UK-based sweets to soft drinks group Cadbury Schweppes has said that 2006 was a “challenging” year. But the company said its results for 2006, to be released on 20 February, will be in line with expectations.
Cadbury’s CEO Todd Stitzer said: “2006 has been a challenging year for Cadbury Schweppes with very strong performances across large parts of our business partly offset by events in the UK and Nigeria. Although these have taken the edge off another year of strategic and operating progress for the group, our performance in 2006 will be in line with previous guidance. As we move forward into 2007, we believe that the fundamentals of our business remain strong.”
The company said it was expecting like-for-like revenue growth in the middle of its target range, with underlying margins (excluding Cadbury Schweppes Bottling Group and Cadbury Nigeria) likely to be broadly level with last year. However, savings from its Fuel for Growth initiative have been offset by higher commodity costs, increased investment in growth and a challenging year in the UK, the company said.
In November, Cadbury Nigeria, a 50.02%-owned subsidiary, discovered a significant overstatement of its financial position, and the company expects full-year figures, after confirmation of the audited results, to include Cadbury Nigeria’s current year trading losses.
But the group said three of its four regions – Americas Beverages, Americas Confectionery and Asia Pacific – had continued “to make strong progress benefiting from further share gains, successful innovation and growth in emerging markets”.
Cadbury Schweppes added that its Americas Confectionery businesses had had an “excellent year”, with its share in the US gum market 300 basis points ahead year-to-date, on the back of flavour and packaging innovation in the Trident range, and the introduction of a new brand Stride, which now has a 2.7% share of the US$3.6bn US gum market.
Latin American businesses continue to grow strongly with innovation driving improved results in Mexico, the company added, but the performance in Europe, Middle East and Africa (EMEA) had been mixed in the second half, with stronger top-line growth in emerging markets largely offset by a weaker performance from the UK.
Profits in the second half will be impacted by challenging trading conditions in the UK and costs relating to increased innovation across the region, Cadbury said. However, in Continental Europe, trading in France, Spain and Greece had benefited from successful gum innovations including further launches of centre-filled gum products under the Hollywood and Trident brands.
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