Cadbury Schweppes announces its full-year earnings on Valentine’s Day, and the group expects to report increased sales for its soft drinks in the US and a downturn in its confectionery lines in the UK
Analysts expect profit before taxes, goodwill and restructuring costs, to rise 12% to £769m (US$1.12bn) on the previous year, citing the focus on the US beverage market as the factor behind improved results. The company’s UK confectionery unit has posted sluggish sales in recent years and analysts expect this trend to continue this year.
This year, Cadbury strengthened its drinks business with the US$1.45bn acquisition of Snapple beverages, while streamlining its confectionery business including dropping less profitable product lines and closing some factories of sugar confectionery maker, Trebor Bassett. The company also recently merged its UK chocolate and sugar confectionery businesses in a move to cut costs and expand distribution of its products.
“The integration of Cadbury and Trebor will give it greater market strength,” said John Parker, an analyst at Deutsche Bank AG in London.
Cadbury is looking to expand its global confectionery business to compete with Nestlé and Phillip Morris. Switzerland’s Lindt & Spruengli, Italy’s Ferrero and the candy business of Warner-Lambert Co, are expected to be possible targets for takeovers.