Cadbury Schweppes unlikely to deliver margin growth in '06

by Eric Schroeder
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LONDON — Cadbury Schweppes P.L.C., the world’s largest confectionary company, said that although it expects to deliver good revenue growth in 2006, it is unlikely to deliver margin growth within its previously stated goal range, blaming a further rise in oil prices.

Cadbury had targeted a growth in margin of between 50 and 75 basis points for 2006. It also missed its margin growth target last year, growing margins by 30 basis points.

Todd Stitzer, chief executive officer, said higher oil prices this year would result in an increase in energy costs of between $22.3 million and $27.9 million.

But he remained optimistic that 2006 will prove to be a good year for the maker of Trident, Halls, Dr Pepper and Snapple.

"Most of our key businesses are showing healthy growth and we have made further share gains in a number of markets," he said. "After a relatively slow first quarter, which was impacted by difficult trading in Europe, Middle East and Africa region, performance has improved in the second quarter as the rate of new product activity has increased."

Commenting on the company’s Americas Beverages unit, Mr. Stitzer said innovations have led the way. Dr Pepper Berries and Cream and 7UP Natural have performed well to date he said, as has the new premium range of Snapple White Teas and Hawaiian Punch Plus.

In Americas Confectionery, gum sales have been strong, Mr. Stitzer said, boosted by successful innovations that are increasing the company’s share in the growing gum market.

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