Cadbury sparkles in spite of cola wars oveyr 2

BY NIGEL COPE

The warm summer weather helped Cadbury Schweppes, the soft drinks and confectionery group, shrug off the UK cola wars last year to increase profits almost 15 per cent.

Cadbury, which has just completed the £1.6bn acquisition of Dr Pepper and Seven-up brands in the US, said it had increased market share in spite of competition from the supermarket own-labels such as Sainsbury's Classic cola. Coca-Cola Schwep-pes, 51 per cent-owned by Cadbury, saw volumes rise by 10 per cent.

David Wellings, chief executive, said: "That's not bad in a year when people said that brands died and the cola wars erupted. It shows that not all soft drinks are sold in supermarkets."

The warm summer is thought to have added £20m to Cadbury's drinks profits last year, though some analysts felt the sunshine helped mask falling prices of between 6-8 per cent.

The beverages division was also boosted by the decision last year by McDonald's, the fast-food group, to switch from its own cola to Coke.

The soft drinks performance helped boost the group's pre-tax profits 14.9 per cent to £478.5m in the year to December. Sales rose 8 per cent to £4.03bn. Cadbury took control of Doctor Pepper and Seven-up in March.

Mr Wellings said the integration plans had been presented to staff in the US on that day and that the Dr Pepper business would remain based in Dallas. He added that large scale job losses were unlikely, though the top three executives would be leaving.

Mr Wellings said the integration of the new businesses represented a significant challenge but would transform the group. "It's the biggest deal this company has seen since Cadbury and Schweppes merged in the late 1960s."

In confectionery, Cadbury said that new operations in Russia were proving a great success, with the Russians consuming a million bars of Cadbury chocolate a day. Production has started in Poland and chocolate production will also start this year in a new plant in China.

In Britain, the recently launched Time Out bar continues to prove a success. The Spanish business, Dulciora, required £23m provision to cover restructuring.

Cadbury owns a 22.5 per cent stake in Camelot, the group that operates the National Lottery, but said it was too early to include the results in its 1994 figures. However, the scheme was performing in line with expectations. There was no evidence that ticket sales in newsagents were reducing spend on confectionery. "If newsagents position the lottery machines towards the rear of the store it draws people in rather than creating a block at the front."

Cadbury said raw material prices were rising and it would negotiate with suppliers.

The dividend was raised 8 per cent to 15.6p. The shares slipped 3p to 423p.