UK: Cadbury Schweppes H1 profits head south

By | 1 August 2007

Cadbury Schweppes has posted a marked slide in profits for the first half of 2007.

The UK-based company, which is looking to sell off its Americas beverage unit, said today (1 August) that profits from operations in the six months to the end of June dropped to GBP115m (US$232.6m) from GBP167m in the corresponding period a year earlier.

Sales in the period were flat, up only 1% to GBP2.3bn.

While the company's beverage unit performed in line with expectations in the half, overall margins were hit by new product investment. The CSD market had what Cadbury described as a "challenging" half, due in part to poor weather. Commodity cost increases in the period were largely offset by price increases, the company noted.

"First half (group) revenue growth was strong driven by investment in brands, innovation and market-place execution," said Cadbury CEO Todd Stitzer. "We wxpect continued good revenue growth in the second half, while margins will be impacted by the combination of growth investment and higher input costs."

The company also said that the drinks unit's sale process is "ongoing" and that "business remains strong". Cadbury had said last week that it has postponed the deadline for the sale due to the volatility of the debt markets. "Should debt market conditions not stabilise sufficiently," the company noted, "we are now fully prepared to pursue a demerger process."

Sectors: Soft drinks, Water

Companies: Cadbury Schweppes

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UK: Cadbury Schweppes H1 profits head south

There is currently 1 comment on this article

Is the private equity bubble that has underscored takeover mania about to burst? There are signs that the investors who underwrite the mountain of debt that funds leveraged buy-outs are a lot less keen than they were. And if private equity firms catch a cold then stock markets do too, such has been the role of private capital in mergers and acquisitions activity that has underpinned stock prices growth.

Cadbury's delayed sale seems just another example of this. PE has been demonised, rightly or wrongly, but it seems to me that people ought to keep their fingers crossed that the M&A activity it has been fueling doesn't dry up overnight.

 

Grape Debate said at 9:55 am, August 2, 2007

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