The stock market reacted cautiously yesterday to a generally confident annual meeting statement from Todd Stitzer, chief executive of Cadbury Schweppes.
Cadbury has set itself a target to widen its margins by 0.5 to 0.75 per cent this year, while driving sales ahead by three to five per cent.
But Mr Stitzer said margins will be "broadly unchanged" in the first six months, " despite increased investment in growth and some above inflation cost increases".
Cadbury enjoyed a very buoyant second six months in 2004.
Cadbury is also on target to deliver cost savings of £100 million a year during 2005, Mr Stitzer confirmed, but as with margins most of it will come in the second second six months.
The US carbonated drinks operation was continuing to take market share and confectionery was performing well across the world. In the City, Marion Mulcahy, an analyst at Numis Securities, said she was pleased with the statement, but that Cadbury's shares are vulnerable to profit taking after climbing as much as 20 per cent this year.
"They are one of the highest rated shares in the sector at the moment," she said, noting they were trading at 18.1 times 2005 earnings forecasts versus a sector average of 12.7 times.
Alongside solid growth, Cadbury's shares have been lifted by speculation it could attract a bid from rivals such as Kraft Foods or Hershey, or that it might sell off parts of its business, such as its European drinks operations.