Today's update comments on year-to-date performance in 2007. Our 2007 interim results will be announced on 1 August 2007.
Todd Stitzer, Chief Executive Officer, said: "We have made a strong start to the year in both confectionery and beverages. Both businesses have continued to benefit from successful innovation and increased investment in marketing, particularly in gum, where the launch of Trident into the UK market has been highly successful."
First Half Trading Performance
For the half year, Americas Beverages is expected to be classified (under IFRS 5) as an "asset held for sale and discontinued operation" and therefore revenues and operating profits from the business will not be included in the operating results of the continuing Group. The operating results for the continuing Group will include the revenue and operating profits from the remaining confectionery business (including Australia Beverages).
Revenues for the three confectionery regions in the first quarter were ahead by 9% boosted by an earlier Easter, a stronger cough and cold season for Halls in North America, the launch of gum in the UK and the cycling of weak comparatives last year. Performance was good in all regions, and in both developed and emerging markets which were ahead by 8% and 11% respectively.
Americas Confectionery revenues were ahead by 15% in the first quarter driven by excellent results in the US and Latin America. In the US, gum market growth remains in mid single digits and we continue to gain share, driven by Stride and Trident. Our share of the US gum market (based on the latest 4 week data) is now almost 400 basis points ahead year-on-year at 34.0% with Stride's share increasing to 4.6% in its first year. Our market price increases in gum in the US and Canada have been followed by our competitors. In Mexico, performance was boosted by the launch of Trident centre-filled gum which already has a 4.1% share of the market.
EMEA also had a strong start to the year with revenues ahead by 7% in the quarter. Gum growth has been strong across the region with successful launches of centre-filled gum under the Dirol brand in Russia, and the Trident brand in Turkey and the UK.
In the UK, our gum launch at the end of January has exceeded our expectations with our initial share comfortably over 10% and the market growing by approximately 20% since our launch. In chocolate, we were impacted by the nut labelling recall in February and the market has been highly competitive particularly at Easter where we chose not to participate in aggressive discounting in the grocery trade. As a result, our share of the total confectionery market is 150 basis points down year-on-year.
Asia Pacific revenues were ahead by 6% in the first quarter with growth impacted by the loss of a third party beverages manufacturing contract. Australia had a slightly slower start in confectionery, however our beverage business performed strongly. Our Indian business had an excellent quarter but we have seen some slowing in Thailand due to the political and economic uncertainty following last year's coup.
The good underlying performance in the first quarter has continued into the second quarter. Given stronger comparatives in the second quarter of 2006, we expect revenues for the first half to be toward the top end of our new confectionery revenue goal range of 4% - 6% like-for-like revenue growth per annum. As we indicated at our full year results presentation in February, we expect margins in the first half to be modestly impacted by the combination of the significantly increased investment behind both new and existing products in the first half (including gum and chocolate in the UK) and higher sweetener costs. Although dairy prices have increased, if they remain around the current level, the impact is not expected to be significant in the context of our total raw material input costs for the year.
First Half Trading Performance - Americas Beverages
Americas Beverages revenues were up 5% in the first quarter on a comparable like-for-like basis (as if the Bottling Group had been owned in the first quarter of 2006), with results continuing to benefit from the consolidation of our route to market.
In a challenging CSD market in the US, our advantaged brands continued to gain share: our total CSD share in the US is ahead by 100 basis points in the first quarter and by 90 basis points in the latest share read. Dr Pepper is lapping demanding year on year comparatives, with last year's performance benefiting from a national sampling campaign for Diet Dr Pepper and Cherry Vanilla Dr Pepper. However, this is being more than offset by growth in our other core flavour brands, 7 UP, A&W and Sunkist.
In non-CSDs, there are encouraging signs that the launch of Snapple into the "mainstream" and "Super Premium" sectors of the tea market is returning the brand to growth. Accelerade, our new differentiated sports drink brand, was launched toward the end of the second quarter.
Next Events
Forthcoming Group announcements/events are listed below:
1 August, 2007 - Interim Results Announcement
Forward Looking Statements
This material may be deemed to include forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. These forward-looking statements are only predictions and you should not rely unduly on them. Actual results might differ materially from those projected in any such forward-looking statements, which involve known and unknown risks, uncertainties and other factors which may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In evaluating forward-looking statements, which are generally identifiable by use of the words "may", "will", "should", "expect", "anticipate", "estimate", "believe", "intend" or "project" or the negative of these words or other variations on these words or comparable terminology, you should consider various factors including the risks outlined in our Form 20-F filed with the SEC. Although we believe the expectations reflected in forward-looking statements are reasonable we cannot guarantee future results, levels of activity, performance or achievements. This material should be viewed in conjunction with our periodic interim and annual reports and registration statements filed with the Securities and Exchange Commission, copies of which are available from Cadbury Schweppes plc, 25 Berkeley Square, London W1J 6HB, UK.