The investors who helped shares of U.K. drinks and candy company Cadbury Schweppes (NYSE:CSG) for most of last year have continued to push the stock upward since significant job cuts and scaled-back manufacturing operations were announced late last year. Yesterday, the company rewarded their confidence, presenting full-year 2003 figures and saying early 2004 is largely on track.
The 2003 numbers reflect the complexities of Cadbury Schweppes due to its global reach. Last year, management grappled with weather issues -- a warm summer helped the drinks business in Europe, for example, while the U.S. held results back -- unique national factors, such as Germany's new mandatory packaging deposits, and customer issues like those that held back Dr Pepper sales in the U.S.
All told, revenues improved to roughly $10.36 billion (roughly converted from U.K. figures). Bottom-line figures fell from last year's levels as costs rose and operating margins fell. If Cadbury delivers on its stated goals of sales growth between 3% and 5% and operating margin expansion, next year's results should be improved.
Investors will expect no less. While Cadbury's ability to challenge Coca-Cola (NYSE:KO) and its $21 billion in 2003 sales seem slim, the company has nevertheless built itself a strong global base in both drinks and confections. (Pop and chip giant PepsiCo (NYSE:PEP) is smaller on a revenue basis than the Crème Egg company, but enjoys a strong position in the U.S. salty snack and non-soda markets.)
Cadbury Schweppes has acquired brands the world over -- most notably last year's $4.2 billion purchase of Adams from Pfizer (NYSE:PFE), making the company the U.S. gum leader -- and has been working to cut costs, integrate businesses and systems, and improve performance in each of its markets. Constantly assailed by American marketing, it's easy to forget there are more than just two companies in the world making non-alcoholic fizzy drinks.
But Cadbury Schweppes is hard at work being the big player. It's looking for acquisitions to spur growth while simultaneously working to improve profit margins and efficiency. There's plenty of room for improvement, but the company is as real as its 7-Up is "Un."
Talk about the future for the company and its range of businesses on our Cadbury Schweppes discussion board.
Fool contributor Dave Marino-Nachison doesn't own any of the companies in this article. He can be reached via email.
