Confectionary giant Cadbury Schweppes is on course for its strongest sales growth in a decade with major new investments planned for Poland, Mexico and Turkey.
The group, which employs around 3,000 workers at its Bournville chocolate plant in Birmingham, yesterday unwrapped proposals for a new £70 million chewing gum factory in Poland.
Cadbury Schweppes is the world's second largest gum maker behind US rival Wrigley, with brands such as Trident, Hollywood, Stimorol and Dirol.
The factory in Poland is expected to open in 2008 as Cadbury spends more money on developing new gum products after agreeing to sell its European soft drinks business for £1.27 billion to a private equity consortium. Proceeds from the sale will be largely used to cut debt.
Cadbury chief executive Todd Stitzer said: "It is an important investment which will enable us to continue to deliver strong growth and innovation from our portfolio of gum brands."
The group, the maker of Dairy Milk chocolate, Trident gum and Dr Pepper drinks, also said it was on track to hit the top of its sales growth target of three to five per cent for 2005, but added it was still unlikely to meet its profit margin goal.
Mr Stitzer declined to give a specific forecast for sales this year, but analysts estimated growth around 5.7 per cent.
"We've had our best sales performance in a decade. We won't be hitting our margin goal range this year but we'll have reasonable growth," Mr Stitzer added.
The group gave a warning on margins in early October after costs rose strongly in the second half, particularly in the US, due to higher oil prices, hurricane-related disruption and a rise in glass bottle prices after a major supplier filed for bankruptcy protection.
Mr Stitzer said cost pressures would still be very challenging into 2006, but hoped to offset this with further cost cutting under its Fuel for Growth programme and with price rises.
Analysts say Cadbury shares trade around 16.5 times forecast 2006 earnings, a small discount to its peers such as Nestle and Danone as these Swiss and French rivals have longer records of achieving solid top-line sales growth.
Cadbury, which also makes Halls cough sweets, Trebor mints and Bubblicious bubblegum, said it was in talks with Tahincioglu Holdings to buy its 30 per cent stake in Turkish confectionery business Kent for around £55 million. Cadbury had already acquired a 65 per cent holding in 2002.
Cadbury said the new plant in Poland would create 300 new jobs.
It is also spending another £30 million to expand production of sugar-free gum at its existing gum factory in Mexico.
Analysts' pretax profit forecasts centre around £848 million for 2005 after £817 million in 2004, when stripping out its European beverage business for both years.
Last month, Cadbury agreed to sell its European Orangina and Schweppes soft drinks business for 1 . 85 billion euros (£1.25 billion) to private equity groups Blackstone and Lion Capital.