CADBURY SCHWEPPES REPORTS PROGRESS IN FIRST HALF

CADBURY SCHWEPPES REPORTS PROGRESS IN FIRST HALF
28 Jul 99

Cadbury Schweppes plc today announced interim results for the first half year to 20 June 1999.

Full Year Half Year 1998† 1999 1998† £m £m £m % 4,106 Sales 1,890 1,853 + 2 642 Underlying Trading Profit* (before major restructuring) 275 258 + 7 600 Underlying Profit before Tax* 256 251 + 2 19.3p Underlying Earnings Per Share* 8.2p 7.9p + 4 570 Profit Before Tax 252 267 - 6 17.1p Basic Earnings Per Share 8.0p 8.4p - 5 9.50p Dividend Per Share 3.05p 2.90p + 5

*Underlying numbers exclude goodwill amortisation, disposal gains/losses and other exceptional charges.
†Prior year restated for restructuring charges (under FRS12); EPS and DPS restated for share split.

Highlights

Dr Pepper/Seven Up company outperformed US soft drinks market for first time Hawaiian Punch, America's leading fruit punch brand, acquired in May Soft drinks disposal to The Coca-Cola Company progressing Cadbury in the UK and Australia grew profits and share Confectionery product innovation continued with major new launches Group's marketing-to-sales ratio increased to 19.7%

Outlook

"Increasing momentum in the first half gives us confidence that progress for 1999 will be satisfactory."

Statement to Shareholders

"Sales rose 2% and underlying trading profit before restructuring charges grew 7% with negligible currency impact. Our largest businesses performed well, despite some difficult market conditions in the first half, with increased marketing investment and growing market shares.

"Underlying profit before tax of £256 million, up 2%, was achieved after an £11million restructuring charge (including £3m in The American Bottling Company), which compares with a restated £3 million charge for the same period in 1998. Profit before tax of £252 million is a reduction of 6% against 1998, reflecting differences in disposal gains and losses (£18m) and the impact of goodwill amortisation (£2m). Underlying earnings per share after restructuring charges increased by 4% to 8.2 pence and the Board has increased the interim dividend by 5% to 3.05 pence.

"Free cash outflow of £98 million was £32 million lower than last year. Higher borrowings of £953 million at the half year mainly reflect acquisitions, including Hawaiian Punch.

"Our marketing-to-sales ratio grew from 19.0% to 19.7%, reflecting continuing investment in our key brands, and the Group improved its trading margin from 13.9% to 14.6%.

"Our Beverages Stream had a good first half with Dr Pepper/Seven Up (DPSU) performing particularly well, growing market share for the first time. Hawaiian Punch, acquired in May, is being satisfactorily absorbed into our DPSU and Mott's businesses.

"Our Confectionery Stream gathered momentum as the first half progressed with a particularly strong Easter. Most businesses performed well but these contributions were offset by a few weaker results in more challenging markets such as Continental Europe.

"We are discussing final arrangements for the disposal of our soft drinks brands to Coca-Cola in the great majority of markets outside the US and Western Europe. Additionally, Cadbury Schweppes South Africa, in which we have a 55% interest, has entered into discussions to sell its carbonated soft drinks business in South Africa to Coca-Cola.

"Increasing momentum in the first half gives us confidence that progress for 1999 will be satisfactory.

"Our goal remains growth in shareowner value. Strategically we continue to focus on the development of robust, sustainable regional positions in our core growth markets of confectionery and beverages. We will build on a platform of strong brands to grow market share, where economically profitable, through innovation in products, packaging and route-to-market. Acquisitions or disposals to enhance this strategy will be sought. Our Managing for Value programme is key to achieving this strategy and continues to identify opportunities for growth in value".  

Sir Dominic Cadbury
Chairman John Sunderland
Chief Executive

REVIEW OF OPERATIONS

Beverages

Our key beverages businesses performed well in the first half of 1999 against a strong comparable period in 1998. At constant exchange rates, sales of £929 million were up 4% and trading profit at £169 million was up 9%. Trading margin increased by a point to 18.2% and marketing investment grew by 8%.

In the US, Dr Pepper/Seven Up, for the first time since acquisition, outperformed the total market with volumes up 3% for the first half generating a trading profit increase of 9%. The Dr Pepper brand is, for the fifteenth consecutive year, growing ahead of the market. 7 Up's overall performance was held back by competitive conditions in a few key markets. Encouraging progress was made by our key flavour brands in the US, particularly Sunkist, Welch's, Canada Dry, A&W Root Beer and Country Time Lemonade.

Elsewhere in North America, The American Bottling Company is undertaking a major restructuring programme which impacted on second quarter profits. Mott's had a difficult first quarter but a substantial sales increase in the second quarter gives confidence for the remainder of the year.

Our operations in Europe recorded an 8% increase in trading profit.

An excellent performance in Australia saw market share gains and leadership in non-cola beverages achieved for the first time, driving a 9% increase in trading profits in the Pacific Rim.

In Africa and Others, a 29% increase in trading profit was led by South Africa and Bromor's performance in particular.

Confectionery

Good performances from our largest chocolate businesses in the UK and Australia with market shares ahead contributed, at constant exchange rates, to a 1% increase in sales to £961 million and trading profits up 2% at £106 million. Most of our other confectionery businesses also recorded good results but a small number of markets experienced short-term trading issues, mainly in the first quarter, which diluted overall performance.

Cadbury Ltd in the UK achieved a trading profit growth of 6% and a market share increase of one percentage point for the half year. Cadbury Australia grew trading profit 12% and recorded a strong market share gain of 2.5 percentage points.

Elsewhere we saw robust contributions from our businesses in Spain, Ireland, Argentina, our chocolate operation in Canada, and also India, New Zealand and Malaysia which is making a very strong comeback after the problems in Asia last year.

Both China and Russia reduced their operating losses. We anticipate break-even in China in 2000 and our Russian business is performing in line with revised expectations.

Weaker businesses included Trebor Bassett in the UK which experienced some trade destocking and was affected by a major internal reorganisation in the first half, now successfully completed.

Our Continental European confectionery businesses continued to be affected by the Russian economic collapse in the second half of 1998; this has particularly impacted our German business, Piasten.

New product launches and increased marketing contributed to improving performances in the second quarter, which augurs well for the second half.

Year 2000

The Group continues to work on the various activities relating to the Millennium bug The testing and fixing of business-critical items is almost complete with the installation of some new systems and upgrades scheduled for the next three months. The key focus is on business continuity and contingency planning. However, because of the dependency on external infrastructures there can be no assurance that the Group's business operations will not face disruption in some parts of the world.

Estimates of the direct incremental costs of the Group's compliance programme remain at approximately £25 million, of which £10 million was spent prior to 1999.

Interim Dividend

The interim dividend of 3.05 pence per ordinary share will be paid on 19 November 1999 to ordinary shareholders on the register at close of play on 13 August 1999.

The results will be published in newspapers from 28 July 1999 onwards. Copies of the full statement will be sent to all shareholders and further copies will be available from the Company Secretary, Cadbury Schweppes plc, 25 Berkeley Square, London, W1X 6HT.

Cadbury Schweppes plc: 020-7409-1313
http://cadburyschweppes.com

Notes to Editors:

1. The following schedules are attached

2. Notes to the Accounts

Dora McCabe
Head of Group Public Relations
Tel: +44 (0)20 7830 5127
Fax: +44 (0)20 7830 5137
contact Dora McCabe

Sally Jones
Investor Relations Director/Finance Director Global Commercial
Tel: +44 (0)20 7409 5124
Fax: +44 (0)20 7830 5157
contact Sally Jones

David Kappler
Chief Financial Officer
Tel: +44 (0)20 7409 1313