Cadbury Schweppes ready to go on takeover trail with £1bn war chest

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Cadbury Schweppes signalled its interest in further acquisitions yesterday as it reported strong full-year results and expanded its growth targets.

The soft drinks and confectionery group, which saw its shares rise 5 per cent making it the FTSE 100's highest climber, said it could spend £1bn this year to add to the eight businesses it bought in 2001.

John Sunderland, the chief executive, said: "We want to use our cash flow to acquire businesses that are faster growing." The company has boosted its non-carbonated soft drinks portfolio, buying Snapple and Orangina, as it seeks to lessen its dependency on the slowing fizzy drinks market.

Progress in sluggish confectionery markets, such as the UK where core chocolate volumes grew 2 per cent in the fourth quarter, eased City concerns that Cadbury's growth targets were too challenging. The group topped its own targets, reporting underlying earnings growth of 16 per cent and free cash flow of £397m, prompting the shares to surge 20.75p to 455.5p.

The group's strong performance underlined the enduring appeal of chocolate, vindicating comments made by both Sir Dominic Cadbury and Mr Sunderland at the height of the dot.com boom questioning investors' attitudes to hi-tech stocks. Mr Sunderland said he had seen "no evidence" to suggest people had stopped turning to chocolate for comfort.

For the year to 30 December, Cadbury reported a 12 per cent rise in underlying pre-tax profits before exceptionals to £886m, beating expectations. Sales grew 21 per cent to £5.5bn.

Cadbury also signalled its determination to drive growth through innovation by appointing Mike Weinstein, widely credited with turning Snapple around, as chief innovation officer.

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