The UK confectionary and soft drinks group Cadbury Schweppes Plc has seen its earnings fall 4% in the first half of the year, as a weak US market, poor weather and changes to 7-up's distribution arrangements in the US affected the company.

Underlying earnings per share were 12.4 pence for the 24 weeks to June 15, down from 12.9p the year before and compared with a consensus forecast of 12.3p.

The news had been expected by the market after the company said in June that a slowdown in consumer spending growth and strong innovation from rivals such as Coca Cola Co were hurting its U.S. drinks business.

In the US, soft drinks sales rose by just 1% on a like-for-like basis. However underlying profits were up 5%.

Todd Stitzer, CEO of Cadbury Schweppes, said: "I am pleased to report reasonable first half results in line with expectations, against a background of weak trading conditions in many markets. Underlying EPS from our base businesses is up 5%, driven by another strong performance from our confectionery businesses in Europe, Africa and the Middle East. Our beverage businesses have had a more difficult half, mainly due to a slow-down in the US soft drinks market. Our recently acquired Adams business is performing in line with the overall acquisition plan.

"Looking ahead, we see the performance of the Group for the full year being broadly similar to that seen in the first half. 2003 is a transitional year for Cadbury Schweppes, as we consolidate 7 UP's new distribution arrangements, integrate Adams and bed down our new organisational structure. These changes are focused on establishing a stronger and more sustainable platform for future growth."

The company forecast "flat to modestly increased profits" for the full year from soft drinks in the Americas and Europe and a stronger performance from its European sweets business.

Stitzer said: "Looking to the full year, we see the performance of the Group remaining broadly similar to that seen in the first half.

"We expect flat to modestly increased profits from Americas Beverages, Americas Confectionery and European Beverages; a continued strong performance from EMEA with the exception of Dandy, and some modest improvement in Asia Pacific.

"As we have said previously, 2003 is a year of transition for Cadbury Schweppes as we consolidate Adams, manage the changes to 7 UP's distribution arrangements in a depressed US beverage market and put in place the organisational changes announced in February.