Sweet News for CadburyJames Thompson
British people reaching for their fix of chocolate during the recession helped Cadbury, (CBY) the confectionery giant, to post tasty profit growth and to raise its margin guidance for the year.
Cadbury said that overall sales of chocolate were up by 10 per cent "led by excellent market share gains in the UK", citing sumptuous sales of Giant Buttons, Wispa and bite-size Clusters. In Britain and Ireland, the company grew sales by 12 per cent to £635m, as it benefited from a longer Easter selling period and market share gains.
Todd Stitzer, chief executive of Cadbury, said he had been "really surprised" by the scale of the trend towards eating chocolate as home.
The group, which manufacturers gum and candy products, also pointed to the popularity of its chocolate in emerging markets, notably India and South Africa, which helped to compensate for a less palatable overall performance in North America and on the Continent.
Mr Stitzer said: "A strong chocolate performance and good growth in emerging markets more than offset a slow start in North American and continued softness in Europe."
Cadbury raised its guidance on full-year profit margins, forecasting an increase of between 80 to 100 basis points, compared to many City analyst expectations of 70 to 80bps. Martin Deboo, the analyst at Investec, said: "Organic revenue and margin improvement have beaten both our and consensus expectations, and full-year margin guidance is being increased, albeit modestly relative to consensus.
"For us, the underlying quality of the margin improvement is better than we expected and we think this will reassure the market that Cadbury's recovery is durable."
For the six months ended 30 June, Cadbury's underlying pre-tax profits jumped by 11 per cent to £262m at constant currency. Its total sales jumped by 4 per cent to £2.77bn.
In North America, Cadbury's revenues fell by 3 per cent, although growth of 1 per cent in the second quarter helped to compensate for a slow start to the year held back by retailers destocking.
The group said that "modest" declines in the US gum market over the half-year was partially offset by strong market gains in the Mexico.
However, Cadbury struggled on the Continent where total sales were down by 5 per cent, hit by gum and candy falling by 5 per cent and 11 per cent respectively.
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