Cadbury Schweppes yesterday said it had made a good start to the year, despite a tough UK market and the impact of rising oil prices.

The company said revenue growth in 2006 was running at near the top end of its expectations and the majority of its businesses had performed well since the start of the year.

However, it said revenues and profits at its UK business Cadbury Trebor Bassett had been impacted by a weak market and increased levels of discounting required to clear excess stock following the introduction of a new IT system.

Cadbury said there were signs of improvement in the UK in recent weeks, helped by a number of new product launches.

Organic chocolate brand Green & Black's continued to perform strongly with further increases in distribution following its acquisition by Cadbury in May 2005.

Chief executive Todd Stitzer said overall the business made a good start to 2006.

He said: "Most of our key businesses are showing healthy growth and we have made further share gains in a number of markets."

The company as a whole expected further growth in margins this year, but warned that the improvement may not meet its own targets because of continuing rises in oil costs.

Mr Stitzer said a huge slump in oil prices would be needed to achieve its margin growth target this year, a "goal range" of 50-75 points.

He said: "If oil prices amazingly went to $50 a barrel we might (hit the target) but I don't think that's likely."

Analysts said the comments on margins from Cadbury were expected, with the pressure on costs offset by strong revenues growth by drinks products Dr Pepper and Sunkist in the US.

Graham Jones, of Panmure Gordon stockbrokers, said the report of strong growth in the US was surprising, particularly as Cadbury faced tough comparatives with its performance a year earlier.

He added: "While the margin story is disappointing, in our view this is offset by the positive commentary on sales, which we believe is more important for Cadbury's rating."

Mr Jones said the overall commentary on sales was more upbeat than expected, with Cadbury indicating that it now expected organic sales growth for the year to be towards the upper end of its three to five per cent goal range.

He added: "Given the wellflagged slow growth in the first quarter, this is very encouraging. We are likely to push up our 4.3 per cent organic sales growth forecast for the year."

The company's UK arm employs around 5,000 people across the country, with 3,000 of them at Bournville.