Cadbury Schweppes said Tuesday it is on course to meet its forecast for full-year performance, with growth in operations running for at least a year in the middle of its range despite problems in Nigeria and the U.K.
The company said the cost of dealing with contamination of chocolate sold in the U.K. will amount to 30 million pounds ($59 million), and it expects to book a one-time exceptional charge of 20 million pounds to 25 million pounds ($39 million to $49 million) for Cadbury Nigeria, following the discovery in November of a "significant overstatement" of its financial position.
Cadbury Nigeria, in which the parent company owns a 50.02% stake, said Tuesday that its chief executive officer and finance director had been dismissed after a preliminary report from accountants "confirmed a significant and deliberate overstatement of the company's financial position over a number of years."
Cadbury Nigeria said it expects to report an operating loss in 2006 in the range of 5 million pounds to 10 million pounds ($9.8 million to $19.5 million).
"2006 has been a challenging year for Cadbury Schweppes with very strong performances across large parts of our business partly offset by events in the U.K. and Nigeria," said Chief Executive Officer Todd Stitzer. "Although these have taken the edge off another year of strategic and operating progress for the group, our performance in 2006 will be in line with previous guidance."
In June, Cadbury was forced to withdraw seven confectionary products from the U.K.-Irish market after reporting salmonella contamination at a plant.
In October, the company downgraded its profit forecast, saying it would increase operating margins "over time" without specifying increments. Cadbury Schweppes previously forecast profit growth of 0.5% to 0.75% per year.
The company reported strong progress in three divisions: Americas Beverages, Americas Confectionery and Asia Pacific.
Share gains in carbonated soft drinks in the Americas were driven by good performances from brands, including Dr Pepper, 7 UP, Sunkist and A&W. In U.S. gum, the company said its share remains 300 basis points ahead this year on a good performance to Trident and the growth of a new brand, Stride.