Bottom Line: Sweet success

CRISIS, what crisis? Cadbury Schweppes may warn that pressure from food retailers is relentless, but the company is still gliding impressively onwards.

Price pressure there undoubtedly is, but Cadbury is adept at dealing with it. In Britain, which still accounts for 46 per cent of its business, drinks prices fell 3 per cent as customers traded down to cheaper brands and up to larger sizes and multipacks. Confectionery prices rose 1 per cent but the price of sugar increased by 13 per cent. Yet it still managed to push underlying profits ahead by 7.2 per cent on sales up 3 per cent.

That reflects further strides in efficiency - sales per employee rose 4.6 per cent but their equivalent costs only 1.6 per cent - keeping margins on their upward trend. While there must surely be a limit to the scope for margin improvement, Cadbury shows no signs of having reached it yet.

The healthy margins also keep cash flowing into the business - pounds 185m last year, up from pounds 100m, before the acquisitions and rights issues. That is just as well, given its acquisition ambitions, unsated even after pounds 476m spent last year.

The nagging worry that it will top even that level of spending with a full bid for Dr Pepper- Seven-Up - requiring a further rights issue - is one of the only dampeners on its shares. But, with a further 14 per cent growth expected this year, putting the shares on a market multiple of 15, there is enough value in them for that to be a minor concern.