Strong sales boost Cadbury revenue outlook

By Charlotte Eyre

- Last updated on GMT

Related tags Cadbury Chocolate Revenue Chief executive officer

Cadbury today said it expects confectionery revenue growth to
exceed the 2007 four to six per cent target range, thanks
to revenues from the UK chocolate and the US gum markets.

The company also said that margins will go up slightly from the 10.1 per cent achieved in 2006, despite expecting commodity costs to rise five to six per cent in 2008.

Chief executive officer Todd Stitzer said that the strong performance from the confectionery performance should be attributed to both sustained investment in the division and a recovery in the UK chocolate market.

"While the economic outlook for 2008 is uncertain, we are confident that our trading momentum will carry on into the New Year, supported by our confectionery growth and efficiency initiatives," he said.

The trading update comes only one day after Cadbury announced that the US hedge fund group Trian, run by active investor Nelson Peltz, has increased its stake in Cadbury from 3.47 per cent to approximately 4.5 per cent.

Cadbury yesterday refused to comment on what effect Trian's increased stake willhave on the company's future, although spokesperson said, however, that the media should not draw too many conclusions from the announcement.

"Cadbury's view is that Peltz has generally been supportive of the company and its moves," she said.

"He has not in fact commented on Cadbury much at all since March."

Over recent months the company has boosted margins by raising consumer prices to cover commodity costs, while benefiting from strong sales of Christmas chocolates, Wispa and Dairy Milk in the UK, and an "outstanding year" of gum sales in the US, Stitzer said.

Revenues were also good in Europe and the Asia Pacific region, despite "challenging" conditions in the Australian retail market.

Cadbury also said that it expects revenue growth in the Americas Beverages division of four to five per cent, although commodity costs will increase five to six per cent.

Strong sales of brands such as Sunkist, 7 UP and Canada Dry helped counteract the disappointing launch of sports drink Accelerade, which led to losses of around £30m (€41.8).

The company also said it is on track plans to demerge the US beverage business, first announced earlier this year.

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