Cadbury, the chocolate and gum maker, said that second-quarter revenue growth will be above 7 per cent, helped by the recovery in demand for Dairy Milk bars and Creme Eggs in the UK.

The company said in a trading statement that it had increased margins by 1.5 percentage points, although the cost-saving programmes and expenses related to the demerger of its Dr Pepper soft drinks unit will lead to a charge of £160 million this year.

Dairy Milk sales in the UK were up in the "low double digits", reflecting the recovery in the brand's fortunes in the wake of the drumming gorilla advertisements, according to the company's advisers. Creme Egg sales did better, registering a "mid double digit" improvement, and the company was upbeat about the progress of its Creme Egg Twisted bar launch in May.

Revenue growth quickened in the second quarter, although Cadbury cautioned that it was facing tougher comparables in the second half, implying that the pace of growth would slacken again as the year progressed. Like-for-like sales in the first quarter were 7 per cent.

The shares added 11.5p to 636.5p in early trading.

The sales improvement was faster than the increase in the cost of cocoa beans, sugar and other raw materials. Commodity inflation is running at between 5 and 6 per cent, and those increases are "expected to be weighted towards the second half."

Cadbury's long-term goal is to lift margins from the 9 per cent achieved in 2006 to the mid double-digit level seen by competitors. It had targeted improvement of around 140 basis points a year, meaning that it is running a little ahead of plan.

Todd Stitzer, Cadbury's chief executive, said: "Despite the challenging economic outlook and further increases in input costs in the second half, we are confident of a successful outcome for 2008," which suggested that the company's profit expectations were unchanged.

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