Cadbury Schweppes reports strong performance

Despite dramatic constitutional changes, demergers and acquisitions Cadbury Schweppes reports sales of £7.9bn – an increase of 7%.

The record growth of 7% in confectionery is best for a decade. Excellent growth in gum with an increase in Trident of 26% and CDM, the largest chocolate brand is up 5% despite the earlier problems of salmonella.

Acquisitions made during the year significantly strengthened existing positions – Intergum in Turkey and Sansei in Japan – and gave the company a strong position in a new emerging market with Kandia Excelent in Romania.

Todd Stitzer, Cadbury Schweppes CEO said,“During 2007, we made significant progress on our cost reduction programme.
Initiatives included:
⣢ The move of group headquarters to a new shared office for the Britain and Ireland confectionery business in the second quarter of 2008 combined with around a substantial reduction in headcount and management reorganisation.
⣢ The closure of the Somerdale chocolate plant in the UK and transfer of production to Bournville and Poland by 2010.
⣢ A reduction of 450 employees – 30% of workforce – at the chocolate manufacturing site at Coolock in Ireland.

“Our confectionery business had an excellent year with strong commercial execution and tight control of costs driving 7% revenue growth and a good margin performance in the second half. These results reflect the benefits of restructuring initiatives undertaken between 2003 and 2007 and continued investment behind our brands. Although the economic outlook for 2008 remains uncertain, we are encouraged by the good trading momentum we have seen in the new year and our continued progress on cost reduction initiatives. We expect meaningful margin progression in 2008.

“Americas Beverages performed well in a tough market with its share of the carbonates market growing for the fourth year in a row. Snapple had an encouraging year driven by successful new premium product launches. As the business prepares for demerger, we believe that the initiatives taken in recent years to invest in core brands, reduce costs and strengthen its route to market gives the business a strong platform for its future success as an independent company.

In Americas Beverages the base business revenues grew by 4%, a good result in view of the challenging US carbonates market.

Soft drinks continued to benefit from the trend away from colas to flavoured CSDs and an excellent performance from Snapple reflected highly successful innovation in super-premium teas and juices. Margins fell reflecting bottling acquisitions and the losses arising from the launch of Accelerade.

The demerger process of Cadbury Schweppes continues, with completion during the second quarter of 2008.