Nearly £760 million was wiped from the value of Cadbury Schweppes today as shares in the Dairy Milk group tumbled following a profit fall and fears that the planned sale of its American drinks empire may not happen.

The group, which was last week forced to delay the £7 billion sale because of “extreme volatility” in the leveraged debt market, admitted that, while interest from bidders remained strong, it was prepared simply to demerge the business.

Cadbury added that it was suffering from higher dairy prices around the world, which meant it was unlikely to see any “margin progression” over the year as a whole.

The group is famous for using a “glass and a half” of full-cream milk in every half pound of Dairy Milk chocolate.

Underlying group operating profits in the half-year to June 30 fell 6 per cent to £180 million, as the weak US dollar and a higher marketing spend offset a 6 per cent jump in revenue to £2.3 billion.

The group’s share of the confectionery market in the UK fell by a percentage point, partly because of the mass recall of Easter eggs earlier this year following a mistake with nut allergy labels.

Cadbury added that the temporary closure of a factory in Sheffield three weeks ago, after the severe floods in the north of England, would affect sales in the coming months.

Cadbury shares fell nearly 6 per cent, or 36p, to 584p, making the group the heaviest faller of a host of blue chips caught up in a wider sell-off on the FTSE 100. The shares are now at their lowest level for more than four months.

Todd Stitzer, the chief executive, insisted that revenue growth across the group, which also makes Trident gum and Halls cough sweets, should continue in the second half.

However, he added: “Margins will be impacted by the combination of growth investment and higher input costs.”

Ken Hanna, the chief finance officer, said a sale of the beverages arm, home to Snapple, Dr Pepper and 7UP, remained Cadbury’s preferred option rather than a straight demerger.

He said: “We’ve still got interested buyers. We are in a very competitive process, so we’re not going to be drawn on a timetable on this.”

Cadbury announced on Friday that it was delaying the sale, in the latest example of investors fleeing high-risk leveraged buyouts following the collapse of the sub-prime mortgage market in America. The Times had forecast the move.

Final bids for the beverages business had been due this week. Cadbury is expected to wait until market conditions settle sufficiently to enable buyers to raise the debt funding to back their purchase.

It is thought that two consortiums remain in the bidding process.

One inclues Bain Capital Partners, Thomas H Lee Partners and Texas Pacific Group. Blackstone, Kohlberg Kravis Roberts and Lion Capital make up the second.

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