Cadbury Schweppes is confident about future prospects for its confectionery and soft drinks brands after delivering results above market expectations.
The company reported an increase in underlying profits from £686m to £792m in the year to December. As some analysts increased profit forecasts for next year, John Sunderland, chief executive, said he was ‘confident of another good year.’
Analysts had expected profits to be hit by a price war in the US soft-drinks market and dull confectionery results, but the company was boosted by the performance of the European beverages division, where operating profits rose 36% to £70m, and North American beverages, with profits up 14% to £406m.
Cadbury’s confectionery business in Europe suffered from a stagnant market particularly in the UK. Operating profits rose £1m on the previous year to £200m. The company recently merged its chocolate and sugar confectionery divisions to boost performance for well-known brands like Dairy Milk and Trebor Mints. Cadbury is also planning further acquisitions in the confectionery sector this year with Switzerland’s Lindt & Spruengli, Italy’s Ferrero and the candy business of Warner-Lambert Co possible takeover targets.
In an attempt to breathe life into the dull market for confectionery in the UK, the sweets and drinks firm plan to extend its chain of cafes catering for chocolate lovers. Cafe Cadbury specialises in drinking chocolate as well as serving tea, coffee and meals. The cafe will also contain a sweet shop where they hope customers will have a nibble while resting with hot drinks.
Chief executive John Sunderland said: “The UK market was subdued. The key to stimulating more consumption is availability. Chocolates are impulse purchases – people have to have the products in front of them to be tempted to buy.”
The firm is also considering installing vending machines in pubs and hospitals as it is due to lose the licence to run vending machines on London Underground stations.
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