The confectionary and soft drink producer Cadbury Schweppes has said that earnings growth for the first half including acquisitions will be broadly flat compared with the same period in 2002.

The company said that while businesses in the Europe, Middle East & Africa confectionery region have generally had a strong period, weak trading conditions in the US particularly affected sales.

Todd Stitzer, Cadbury Schweppes' CEO said: "Overall revenue and earnings in our base business have made reasonable progress in constant currency against a background of weak trading conditions in the first half. This growth in earnings has been broadly offset by the dilutive impact of acquisitions. 2003 will be a transitional year for the business as we focus on building a stronger and more sustainable platform for future growth."

European Beverage operations had a slow start to the year, the company said, in generally competitive markets. In Germany, Apollinaris & Schweppes is outperforming a weak soft drinks market; however, its profits are being impacted by increased investment in marketing and new capacity.

Meanwhile, consumer demand for soft drinks in the US during the first half was affected by a combination of adverse weather conditions and weak consumer spending. Dr Pepper was performing in line with other core carbonated brands although performance is being impacted by the focus of the cola systems on innovation and weakness in fountain, a statement said.

The changes to the distribution arrangements for 7 UP in the US are in line with expectations.

"Our non CSD brands have had a satisfactory start to the year with core brand sales expected to be level or ahead at the half year. Our Mexican business continues to produce good results. Overall, we expect profits from the Americas Beverages region to be modestly ahead in the first half," the company said.

Profits in the Asia Pacific region in the first half are now expected to be lower year-on-year due to weaker results from businesses in Australia. Cadbury said: "The Food & Beverage business has taken longer than expected to regain accounts lost as a consequence of the disruption caused by the IT implementation in the fourth quarter 2002. The confectionery business has been affected by the combination of reduced consumer demand following significant price increases early in the year and destocking by the trade. "

The company said that restructuring charges will be significantly higher in 2003, as a result of the acquisition of Adams and the management reorganisation. Much of this however, will fall in the second half.

It also said that the net effect of currency movements on earnings is expected to be around 5% adverse.