Cadbury 'cautiously optimisitc'

CADBURY Schweppes reported steady underlying half-year sales growth thanks partly to the resurgent Dairy Milk brand in the UK. But chief executive Todd Stitzer could only declare himself 'cautiously' optimistic for the rest of the year.

The company has been hit hard by high raw material costs at a time when it faces one-off costs for its Stitzer's dramatic 'Fuel For Growth' restructuring project that includes axing 10% of the 50,000-strong workforce.

Meanwhile, it faces heavy interest costs from the $4.2 billion acquisition last year of the vast Adams chewing gum operation in the US.

All of this led to heavy exceptional costs that dragged profits in the six months to 13 June down to £265m against £294m the previous year.

Turnover was £2.95bn against £2.7bn in the same period a year earlier.

But the Adams integration appears to be progressing well, while the anticipated bounceback in the performance of its crucial US fizzy drinks arm - led by Dr Pepper - is well established after difficulties in tough markets.

The half-year dividend will rise by 4% to 3.8p a share against 3.65p at this stage last year.

Stitzer said: 'Although we have a number of challenging integration projects in the second half, we remain cautiously optimistic about the outcome for the full year and expect to deliver growth within our goal ranges.'

Cadbury launched a host of slimline spin-off products in the face of growing controversy over obesity.