Cadbury to cut jobs in earnings drive

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The Independent Online

Cadbury Schweppes hinted yesterday that it was preparing for a series of extensive job cuts as it overhauled its business before a drive to boost its earnings growth next year.

The group, whose brands span Dr Pepper drinks, Dairy Milk chocolate and Halls throat sweets, has already axed about 400 jobs in Denmark, the US and Australia as part of a cost-cutting programme.

Todd Stitzer, the newly appointed chief executive, said the company was "not ready to quantify" the scale of any job losses, although he said no "significant asset" disposals were expected. He plans to update investors this autumn about how the group intends to increase its rate of growth for 2004. His comments came as Cadbury said earnings per share in the six months to 15 June had dropped 4 per cent. The group usually aims for double-digit earnings growth but abandoned that target for 2003 after buying Adams, the chewing gum business, in March.

The group blamed a tough US soft drinks market, held back by "extreme weather", weak consumer demand and a legal dispute with the country's biggest fast-food operator, for weak sales at its soft drinks arm. Like-for-like sales at its Americas beverage division, which also owns 7 UP and Snapple, rose by just 1 per cent. 7 UP sales sank 16 per cent, reflecting new distribution arrangements.

In the US, consumers have opted for diet fizzy drinks over their full-sugar counterparts, with the market for diet drinks growing by 4.5 per cent in the first half against a 1 per cent fall for regular drinks. Mr Stitzer said this presented an opportunity for diet Dr Pepper, which research has shown tastes more like its full-sugar version than any other soft drink.

While Mr Stitzer said the integration of Adams was on track, he admitted other recent acquisitions had not fared so well. In particular, the integration of Orangina, the French soft drink brand, and Dandy chewing gum were behind schedule.

The company said pre-tax profits fell 16 per cent to £294m, hit by a weaker US dollar, although underlying profits were down just 5 per cent at £365m. The Adams purchase diluted earnings per share, which fell from 12.9p to 12.4p in line with analysts' expectations.

David Kappler, the group's finance director, is to step down next year after 38 years with the company.

Shares in the group rose 3.5p to close at 353p.