Cadbury reveals fall in profits

Aug 2 2007 By Jon Griffin, Birmingham Mail

CADBURY Schweppes has revealed a six per cent fall in profits for the first six months of the year - just over a month after announcing 7,500 jobs would go.

But the parent company of the Bournville chocolate maker insisted the turbulent debt markets would not derail plans to separate its 7UP-to-Dr Pepper drinks business in North America.

The confectionery giant is pursuing a sale process, but said it was prepared to carry out a demerger if markets did not stabilise sufficiently.

Meanwhile, the group has insisted the future remains rosy for the Bournville chocolate factory, whose 3,000 workers received a vote of confidence in June following £40 million of investment in production facilities.

The Birmingham factory remains the largest chocolate making facility in the world and is hailed as a "manufacturing centre of excellence" within Cadbury.

The parent group revealed last week it would give suitors more time to put together bids for the drinks arm "against a more stable debt financing market".

Stripping out the drinks business, Cadbury said underlying profits fell six per cent to £180 million in the first six months of the year.

While revenues grew by six per cent to £2.3 billion, Cadbury said profitability was hit by a number of factors, including exchange rates and the cost of launching its Trident gum business in the UK. Marketing expenditure at £245 million was £5 million higher than 2006.

Cadbury also received a £1 million fine after admitting last month to food safety offences.

The charges, which included a failure by Cadbury to notify the authorities of positive tests for salmonella, were brought by Birmingham City Council and Herefordshire Council after 42 people fell ill last year.