LONDON -(Dow Jones)- Cadbury PLC (CSG) Thursday said it was confident it would meet full-year expectations after growing second-quarter sales above its targets, though it said growth in sales and margins would be weaker in the second half of the year.
The maker of Dairy Milk chocolate and Trident chewing gum said that comparable sales in the second quarter would be "modestly higher" than the 7% reported for the first quarter. The company has a target for growing confectionery sales by 4% to 6% a year. Good progress had also been made on margins, with growth of "at least 150 basis points" expected despite increased marketing investment.
"Overall, while we expect some bias in revenue and margin growth toward the first half, we remain confident of a successful outcome for 2008," said Chief Executive Todd Stitzer in a statement.
The update is Cadbury's first as a standalone confectionery company. Cadbury split from its American Beverages division last month. The division - now called Dr Pepper Snapple Group (NYSE:DPS) (DPS) trades on the New York Stock Exchange.
The company said the slower rates of growth expected in the second half of the year were a result of tough comparative figures from the second half last year and a second-half weighting of commodity cost increases - which are expected to be in the 5% to 6% range for the full year.
The company said in April that price increases were offsetting the higher cost of commodities while cost savings were on track to deliver improved margins.
Cadbury shares closed Wednesday at 625 pence - similar to their level immediately after the demerger. The shares had initially risen on consolidation hopes, though those hopes have now subsided somewhat.
The speculation followed news that Mars Inc. of the U.S. was buying gum maker Wm. Wrigley Jr. Co. (NYSE:WWY) (WWY) in a $23 billion deal.
Analysts have long speculated that a merger between Cadbury and U.S. rival Hershey Co. (NYSE:HSY) (HSY) would be a good fit. The two have discussed a possible combination a number of times, though Hershey's 78%-owners - The Hershey Trust - has always been reluctant to relinquish its controlling stake in the company. Cadbury is also seen as a potential target of Kraft Foods Inc. (NYSE:KFT) (KFT).
The move to spin off the drinks division was prompted by news early last year that U.S. activist investor Nelson Peltz had taken a stake in Cadbury.
Company Web site: http://www.cadbury.com
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278; michael.carolan@ dowjones.com
(END) Dow Jones Newswires 06-19-08 0238 Copyright (c) 2008 Dow Jones & Company, Inc.
