Britain's Cadbury Schweppes said it expected further progress as it topped forecasts with a 13% rise in profits, helped by the fastest sales growth in a decade.
Cadbury, which makes Dairy Milk chocolate, Trident gum and Dr Pepper drinks, has 9.9% of the global confectionery market, making it the biggest.
It said it made an underlying pretax profit of £873m sterling in the 52 weeks to January 1. Sales rose 7% to £6.51 billion. The final dividend was raised 3% to nine pence, lifting the total dividend by 4% to 13 pence.
Cadbury said its underlying operating margin had risen 0.3 percentage points to 15.9%, below its annual target for a 0.50-0.75 point increase but better than the 0.25 points some analysts had forecast as savings of £90m from the company's 'Fuel for Growth' programme more than offset rising raw material and oil related costs. Margin growth in 2006 will be weighted towards the second half, the company said.
The London-based group's drive for faster growth is leading to a re-rating of the stock, but has primed talk Cadbury could be an attractive takeover target. Its growth has fanned the flames of takeover talk, but all the potential predators named for Cadbury - such as Hershey, Nestle, Kraft Foods and Wrigleys- would face problems.
Analysts say Hershey, controlled by a trust, could not afford the whole of Cadbury, although a merger of equals between their confectionery interests may make sense in the future once Cadbury has demerged its soft-drinks business.
Nestle would face big regulatory issues especially in Britain, while Kraft is still to be fully spun off from Altria Group, and Wrigley would hit antitrust problems in gum, particularly in the US, analysts say.
The sale of Cadbury's European beverage arm for €1.85 billion, completed earlier this month, to private-equity groups Blackstone and Lion Capital, has helped revive demerger talk. Analysts say a demerger of its soft-drinks interests in North America and Australia, which account for 40% of company profits, is more long-term but may give the group a rating similar to pure confectionery plays such as Hershey and Wrigley.
