Four months after pulling the sale of its US beverages business in favour of demerging the division through a stockmarket listing, Cadbury Schweppes has lost none of its capacity to disappoint. Rather than returning surplus cash through a special dividend, the £13 billion company says that the requirement to maintain an investment grade credit rating means there will be no payback of capital.

With the shares having rallied 11 per cent since the end of last month in anticipation of a one-off payment, they fell 5 per cent this morning, the worst performance in the FTSE 100. The extent of the fall – some 30p – also gave an indication of the size of the payout that had been previously priced in: about £630 million.

Last year’s numbers, although lacklustre, were free of similar shocks. Earnings were up 2 per cent on a constant currency basis but down 4 per cent in current currency. Aside from a weak US dollar, it was the US beverages division that provided the drag, with operating margins held back by a bottling acquisition and the failed launch of Accelerade.

However, organic growth in confectionery was an impressive 7 per cent, while the company has confirmed it is on track to meet the top end of its forecast range of revenue growth of between 4 per cent and 6 per cent this year.

The shares are likely to remain underpinned ahead of demerger, after which the merits of the confectionery division should emerge more clearly. However, at 586p, or nearly 18 times current year earning, they can be no more than a hold for now.

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