Bumper Cadbury hungry for more

 

Cadbury Schweppes has unwrapped bumper profits and declared that acquisitions will remain core to its growth strategy. Last year, it snapped up Snapple, Hollywood and Slush Puppie, but missed out on the year's big prize, Nabisco, and chief executive John Sunderland is keen to be a player in any future consolidation. 'It's not a question of money, but of opportunities,' he said.

Shares in Cadbury rose 12 1/4p to 468 1/2p after the group revealed a 16% increase in operating profits to £778m for the full year to 31 December, on sales up 6% to £4.6bn.

Earnings per share showed a 15% increase on an underlying basis, but were actually 20% down at 24.5p as an exceptional gain of £350m from the sale of various subsidiaries boosted 1999's pre-tax profits to £958m. Sunderland said the strong performance of businesses acquired during the year had contributed significantly to the fizz in profits.

He predicted a return to 'normal' conditions in the crucial US soft drinks market after a price war between Pepsi and Coca-Cola left the market flat. Against this background, a 1% increase for Dr Pepper/Seven Up was deemed 'excellent', while European beverages merited an 'outstanding'.

Confectionery sales in the UK were sluggish. Sunderland blamed the ongoing swing to supermarket shopping, which limits the number of visits to the corner shop. 'If you are in the impulse market, like we are, you need to find new channels of distribution,' he said. He is looking at ways of penetrating the massive catering market and even considering selling chocolate in pubs. 'I'd rather people ate Creme Eggs than pickled eggs,' he said.

Sales growth around the world would be top priority, he said, in order to meet management's ambitious financial targets, including double-digit earnings growth and a doubling of free cash flow to £300m.

Meanwhile, Cadbury and Pernod Ricard have not agreed a price for the French group's Orangina division after more than four months of talks, although negotiations are continuing. Sunderland suggested selling Orangina was no longer a priority for Pernod in the wake of its joint acquisition of Seagram's wine and spirits division with Diageo. 'Pernod has lots of other things on its plate but we'd like to see it resolved before the summer,' he said.

As well as Orangina, he wants to buy Pernod's French juice business and a US chocolate drink that it owns.