Cadbury sees strong sales growth for 2005

LONDON - Cadbury Schweppes Plc, the world's largest confectionery group, said today it was on track to hit the top of its sales growth target for 2005, but added it was still unlikely to meet its profit margin goal.

The maker of Dairy Milk chocolate, Trident gum and Dr Pepper drinks said its 2005 sales growth would be at the top end of its 3 to 5 per cent target.

But it was unlikely to meet its target of a 50 to 75 basis point annual gain in operating margins.

The group first gave a warning on margins in early October after costs rose strongly in the second half, particularly in the United States, due to higher oil prices, hurricane-related disruption and a rise in glass bottle prices after a major supplier filed for bankruptcy protection.

"We have continued to see strong sales momentum across our confectionery and beverage businesses, driven by sustained investment in growth and successful innovation," said Chief Executive Todd Stitzer in a trading statement.

The group, which makes Halls cough sweets, Bubbas bubblegum and Trebor mints, said it was in talks with Tahincioglu Holdings to buy its 30 per cent stake in Turkish confectionery business Kent for around 55 million pounds ($139 million pounds). Cadbury had already acquired a 65 per cent holding in 2002.

Cadbury said it would spend 70 million pounds on a new chewing gum factory in Poland and invest 30 million pounds at its existing gum factory in Mexico to expand production.

Last month, Cadbury agreed to sell its European Orangina and Schweppes soft drinks business for 1.85 billion euros ($3.76 billion) to private equity groups Blackstone and Lion Capital.

When the deal is complete, Cadbury will earn two-thirds of its profits in confectionery and the rest largely from North American soft drinks.

- REUTERS