Profits Down at Cadbury Schweppes

24 July 2003

Profits at Cadbury Schweppes are down after the group was hit by tough conditions in the US beverage market.

Reporting results for the six months to June 15, the British chocolate, candy and drinks colossus posted pre-tax profits of £294 million ($471m; €413m), a 16% year-on-year drop (–9% at constant currencies), despite a 15% surge in sales to £2.7 billion.

The group said its US beverages, which include the Dr Pepper brand, had been hit by bad weather and a slowdown in consumer demand. It also reported restructuring costs of £26m, £9m more than in the same period last year, and booked higher goodwill amortisation charges.

Nevertheless, Cadbury is raising its ad investment. It poured £318m into marketing over the first half, a 19% jump on last year. This equates to a marketing to net-sales ratio of 11.8%, up from 11.4% twelve months ago. Excluding acquisitions, however, this ratio sank to 10.8%, a fall Cadbury attributed to currency fluctuations and different phasing of spend.

Looking ahead, the group forecast a second half roughly in line with the previous six months.

Data sourced from: Cadbury Schweppes; additional content by WARC staff