Cadbury Q2 sales above target

Cadbury, the world's biggest candy maker, said it was on track for full-year earnings after reporting second quarter sales growth above its targets Thursday.

Cadbury warned, however, that sales growth would be slower and margins weaker in the second half.

The maker of Dairy Milk chocolate, Trident gum and Halls cough drops said that it expected second quarter growth to be "moderately higher" than the 7 percent like-for-like growth reported for the first quarter.

That will put growth for the first half above the company's 4 percent to 6 percent target range.

"We're off to a strong start as a focused confectionery business and expect first half revenues above our goal range and good progress on margins," said chief executive officer Todd Stitzer. "Despite the challenging economic outlook and further increases in input costs in the second half, we are confident of a successful outcome for 2008."

Shares in the company rose 1.5 percent to 634.5 pence ($12.50) .

The trading update was the company's first official report since it split from its U.S. beverages business last month, which is now trading as Dr Pepper Snapple Group Inc., on the New York Stock Exchange.

Cadbury said it recorded good growth in the first half across all its categories and double digit growth in emerging markets. It added that higher prices across most of its markets had helped it recover increases in input costs.

Cadbury PLC has announced plans to close 15 percent of its confectionary factories by 2011, cutting around 7,500 jobs, and shift its headquarters to London's outskirts to cut costs amid rising input charges thanks to surging dairy and cocoa prices.

It said on Thursday it expects commodity cost increases for the year to remain in the 5 percent to 6 percent, but said those increases are now expected to be weighted toward the second half.

Cadbury said it had recorded "excellent revenue growth" in the United States, where it said the gum market is ahead 8 percent in the year to date, benefiting in part from price increases imposed last year.

U.S. growth continues to be driven by its Trident and Stride brands, while Halls has also improved, it said.

In Europe, the company said that planned route to market changes in Russia and Turkey and lower market growth in Southern Europe have impacted performance.

While in the Asia Pacific, revenue growth benefited from an improved performance from confectionery in Australia and strong double-digit growth in emerging markets.

Cadbury is due to announce its first half results on July 30.