Cadbury Schweppes yesterday underscored its commitment to its Bournville factory where it is spending £40 million on a new production line, the group's largest investment ever in a single factory.

Cadbury has grown to be a multi-national with only 15 per cent of its sales in the UK nowadays.

But Todd Stitzer, chief executive, stressed yesterday that Cadbury Dairy Milk - now in its 100th year and being promoted as a key brand worldwide - has to be made at Bournville.

"The cows are here," he said. "The grass is different. If we made it from Polish milk it would taste different."

Mr Stitzer was presenting half-time results showing profits of £344 million, 12 per cent ahead at constant currencies, or an underlying improvement of seven per cent, with a negligible impact from acquisitions.

Sales beat the long-term growth target of three to five per cent, rising by six per cent to £3.127 billion, boosted by higher investment and innovation - including a strategy of marketing Dairy Milk round the world with a variety of new flavourings and presentations.

One of the latest, intended to appeal to weight-conscious chocolate eaters, is a mini-bar containing only 99 calories. The chocolate is exactly the same as in larger bars. There is just less of it.

"It has been a very good year so far for Cadbury Schweppes," said chairman John Sunderland, who becomes non-executive next month.

The interim dividend is raised by five per cent to 4.0p, helping the shares to close 5.5p higher at 547.5p after touching 556p earlier in the day.

Confectionery sales in the US were 13.6 per cent higher, helped by a nine per cent gain by Dairy Milk.

Trident gum and Halls cough sweets - benefiting from "an exceptional cough and cold season in the US - were up by 15 per cent and 17 per cent respectively.

Ken Hanna, chief financial officer, said that although underlying operating margins had risen by only 0.1 per cent, Cadbury still expects to meet its target of an increase of 0.5 to 0.75 per cent for the full year.

"We flagged in February that we expected first-half margins to be lower than our goal ranges, but we would make the full year, and we are still saying that today," he said. Cadbury usually books 60 per cent of its sales in the second half-year, Mr Hanna added.

Mr Stitzer commented "We have had a strong start to the year as increased investment in growth and focus on innovation and market place execution had a positive impact on our business around the world.

"Although the external environment is likely to remain challenging, we will continue to increase investment behind long-term growth and expect to deliver within our ranges for the full year."

In the UK, growth will ease off in the second six months as Cadbury concentrates on getting a newly installed IT system up and running well in time for pre- Christmas deliveries.

Mr Hanna said he expects oil costs to rise by another £10 million after a £15 million increase in the first half of the year. But much of this should be offset by efficiencies and price increases.

Cadbury has hedged the prices it pays for cocoa for all of this year and bought forward into 2006, he added.