UK confectionery and soft drinks group Cadbury Schweppes is showing an upbeat year-to-date performance in 2002. British and Irish confectionery operations continue to perform strongly with increased sales forecast to drive a double-digit profit increase.
John Sunderland, Cadbury Schweppes CEO, commented: "The development of the business during the second half of the year has continued in line with our overall objectives and we expect to achieve our financial targets for the full year 2002."
Overall results in the second half of the year were satisfactory. According to the company, continental European, African, Indian, and Middle Eastern confectionery businesses are also performing well. The picture is not so rosy in the Americas where confectionery profits are expected to be lower due to the difficult economic environment in Argentina and a subdued trading performance in North America.
In contrast beverage businesses are performing satisfactorily in North America. Like-for-like volume results in the second half have benefited from stronger performances from a number of key brands including Dr Pepper and Snapple.
Changes to the distribution arrangements for certain soft drinks brands, primarily 7 UP and Hawaiian Punch, are adversely impacting volumes and, as predicted at the interim results, will leave overall like-for-like volumes flat for the region in the second half.
European beverages also performed satisfactorily with a good profit performance driven by cost reduction programmes and the integration of acquisitions, said the company.
Turning to Asia Pacific, the Australian and New Zealand confectionery operations have had a good second half and are on track to deliver strong volume and profit results for the full year. In Australia's Food & Beverages unit, however, second half results have been significantly impacted by higher than expected start-up costs and some business disruption.
In China, the confectionery business has been adversely affected by a slowdown in the consumer goods market. As a result, profits for the Asia Pacific region in 2002 are expected to be lower year-on- year.
Cadbury Schweppes warned that because it earns around 80 per cent of its profits from businesses outside the UK, the strengthening of sterling against a number of currencies, mainly the US dollar, is expected to negatively impact earnings by around 4 per cent in 2002.