Slow Start to 2006 for Cadbury Schweppes

19/05/06 The chairman of the world’s largest confectionery company Cadbury Schweppes, John Sunderland revealed at the company’s AGM that from a trading perspective, the company has 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. Input costs remain challenging, particularly given the further rise in oil prices. We will update the market on current year trading at our interim update on 7 June," he commented.

"2005 was another successful year for Cadbury Schweppes. We achieved our highest rate of revenue growth for a decade, with all of our major businesses making a significant contribution. Increased innovation and improved market-place execution drove this performance and we saw share gains in the majority of our key markets. I am pleased to report that the Adams business, the largest acquisition in our history, has been integrated ahead of schedule and performance is exceeding our expectations”, he said at the meeting.

"We continue to focus on ensuring our business portfolio is optimally positioned for growth and returns in terms of both category and geographic participation. Over the last year, we have sold a number of businesses and are redeploying the capital into businesses and markets which we believe will generate superior growth and returns”, he noted.

Cadbury Schweppes successfully sold its Europe Beverages business earlier this year for £1.3 billion, a price which exceeded the market's expectations. The sale of other smaller businesses netted the company around £40 million. Sunderland said they expect to raise between £300 and £350 million over the next two years through the disposal of other small businesses and surplus properties.

"We recently completed the purchase of the remaining 55% of Dr Pepper/Seven Up Bottling Group which we did not already own. The integration of our biggest bottler in the US with our Americas Beverages business significantly enhances our ability to grow our brands in that market”, Sunderland said.

Other acquisitions include: Green & Black's, the UK's fastest growing premium chocolate brand; a further 30% stake in our leading Turkish confectionery business, taking our shareholding to 95%; moving to majority in Cadbury Nigeria, the largest confectionery business in that market; and Dan Products, the number one gum business in South Africa.

"We are also investing in major capital projects including a new £70 million gum plant in Poland to service our fast growing European gum business and a £40 million expansion of Cadbury Dairy Milk production capacity in the UK. In addition to investment in growth and returns, we are investing in our people by increasing the funding of our pension funds, through a £125 million one-off payment and increased annual contributions over the next few years. We expect these payments to significantly reduce the deficit,” he noted.