UK confectionery and beverage giant Cadbury Schweppes has said that it expects first-half earnings to be “broadly level” with 2002 in constant currency terms, but 5% lower including the effect of currency movements.
In a trading update Cadbury Schweppes CEO Todd Stitzer said, “Overall revenue and earnings in our base business have made reasonable progress in constant currency against a background of weak trading conditions in the first half. This growth in earnings has been broadly offset by the dilutive impact of acquisitions. 2003 will be a transitional year for the business as we focus on building a stronger and more sustainable platform for future growth.”
The company said businesses in the Europe, Middle East & Africa confectionery region generally had a strong period, led by Cadbury Trebor Bassett which continued to benefit from recent restructuring and investment. Cadbury Trebor Bassett’s performance was driven by strong Easter sales and further market share gains. Elsewhere in the region, Cadbury said emerging market operations in Africa, particularly South Africa and Egypt, performed well, but performance at Dandy was affected by market and competitive conditions in Russia.
The company said its European Beverage operations had a slow start to the year in generally competitive markets. In its Americas Beverages division, consumer demand for soft drinks in the US during the first half was affected by a combination of adverse weather conditions and weak consumer spending. The company said its Mexican business continued to produce good results. Overall, Cadbury expects profits from the Americas Beverages region to be modestly ahead in the first half.
Cadbury’s Americas Confectionery division had a mixed start to the year with an excellent recovery in Argentina offset by continued challenging trading conditions in Canada.
Profits in the Asia Pacific region in the first half are expected to be lower year-on-year due to weaker results from Cadbury’s businesses in Australia.
At the end of March Cadbury completed the acquisition of the Adams confectionery business. Cadbury said that to date, performance of the business and the integration are in line with expectations. While trading in the North American gum market remains highly competitive, Cadbury said the business continues to make excellent progress in the Latin American and Asia Pacific gum markets and with the Halls brand around the world.