Cadbury says early Easter and price cuts limit growth

By David Jones

LONDON (Reuters) - Cadbury Schweppes (CBRY.L), the world's biggest confectionery group, said an early Easter and a price war hit UK sales of chocolate eggs, souring its global growth and depressing its shares on Friday.

The British group, which plans to spin off its North American soft drinks unit next month, said its confectionery sales grew 7 percent in the first quarter of 2008, but its British sweet sales rose just 3 percent.

Chief Executive Todd Stitzer said hefty price discounts of chocolate eggs by rivals over Easter had trimmed growth by 2 percentage points and an early Easter in March helped trim another point off growth.

"Overall, Britain had a very good first quarter, but there were a number of one-off factors with an early Easter leading to a 2-3 week shorter selling period and price discounting," Stitzer told a briefing after a first-quarter trading update.

Cadbury shares closed 2.6 percent down at 563-1/2 pence in a lower London market. Some analysts had expected stronger growth of around 8 percent after a good second half in 2007.

"While the overall delivery is respectable, we have to confess that overall this is not quite as strong a start to the year as we had anticipated," said analyst Jeff Stent at Citi.

Ian Kellett at Numis Securities added: "UK sales were up 3 percent which is not a great performance given that Easter was in Q1 and that the group took price increases to offset higher commodity costs."

After the trading update, Cadbury's shareholders voted overwhelmingly in favour of the drinks demerger in a series of meetings with the split set to take place early next month.