Heading for a price rise?

The company, whose brands include Dairy Milk chocolate and Trident gum, said it would seek to lift prices because costs were set to rise by 5-6% in 2008.

Its comments came as it reported a 9% fall in annual profits to �670m ($1.3bn) as restructuring costs rose.

Cadbury is currently in the process of spinning off its American drinks unit.

Split

Revenues at Cadbury Schweppes' confectionery business grew by 7% in 2007, the firm said, the best performance in a decade.

In the UK, confectionery revenues rose 5%, helped by an advertising campaign for Dairy Milk and the relaunch of the Wispa bar.

See Cadbury Schweppes' share price

For the coming year, the company said it expected revenue growth in its confectionery business to be between 4% and 6%.

However, it warned: "Commodity input costs are expected to be 5% to 6% higher in 2008 and we will seek to offset these increases through price rises."

Cadbury added that the demerger of the North American drinks business - which includes brands such as Dr Pepper and Snapple - was set to be completed in the second quarter of the year.

Originally, Cadbury had been trying to sell the drinks business, but the turbulence in the world's financial markets last year scuppered these plans, so the firm opted to spin it off instead.

The company said that following the division of the firm, Roger Carr, currently deputy chairman, would be appointed chairman of the new confectionery company, which will be called just Cadbury.

Wayne Sanders, former president and chief executive of Kimberly-Clark, will become chairman of the new drinks company, Dr Pepper Snapple Group.