Shares in Cadbury Schweppes fell today (19 May) after Cadbury chairman John Sunderland warned investors of challenging conditions and a slow start of the year.

“From a trading perspective, we had a relatively slow start in the first quarter of 2006, particularly in Europe. We are now seeing increased momentum in our gum and beverage businesses and Easter was satisfactory in our key chocolate markets,” Sunderland commented.

Addressing shareholders at Cadbury’s AGM yesterday, the chairman also spoke of escalating costs as he looked to the future. “Input costs remain challenging, particularly given the further rise in oil prices,” Sunderland said, adding that Cadbury will give an update on its trading in the year so far on 7 June, ahead of half-time results on 2 August.

Sunderland reminded shareholders that 2005 had seen the sharpest revenue growth that the company had witnessed in the past decade, driven by increased innovation and improved market place positioning.

During the year, Cadbury refocused its portfolio through a number of sales and acquisitions. Sunderland reported that the integration of the Adams business, the largest acquisition in the company’s history, had been completed ahead of schedule.

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The acquisition of the remaining 55% of the Dr Pepper/Seven Up Bottling Group would allow Cadbury to improve performance in the US soft drinks market, Sunderland continued. The Cadbury boss also highlighted various other strategic acquisitions including Green & Blacks in the UK, a further 30% stake in the Turkish confectionery business (taking Cadbury’s shareholding to 95%), a majority stake in Cadbury Nigeria and Dan Products, the number one gum business in South Africa.

Cadbury disposed of its European beverage business for GBP1.3bn (US$2.44bn), while the sale of other smaller businesses netted the company around GBP40m. “We expect to raise between GBP300 and GBP350m over the next two years through the disposal of other small businesses and surplus properties,” Sunderland said.

Sunderland highlighted major investments, including GBP70m in a Polish gum plant and GBP40m in the expansion of Dairy Milk production capacity.

Despite the up-beat look at 2005’s achievements, at time of press, shares in Cadbury Schweppes hit a 12-month low of GBP5.