Outlook for 2007
We expect another good year of revenue growth in 2007, supported by an active innovation programme. We are making a substantial investment in organic growth opportunities in support of a number of large initiatives, including:
- The launch of Trident gum into the UK, leveraging the strength of our existing distribution network
- Higher marketing and innovation investment in our UK chocolate business
- Further roll-out of centre-filled gum
- The expansion of the Stride brand in the US
- Revitalisation of Snapple, with further innovation in super-premium teas and the launch of a mass market offer
- Entry into the US$6.8 billion, fast-growing, sports drink market in the US with the launch of Accelerade, a differentiated offer for serious athletes
We are seeing increased costs in our beverage operations in 2007, particularly sweetener costs, but expect energy costs to abate somewhat during the year. We continue to see opportunities to reduce our costs both from our Fuel for Growth programme (which ends in 2007) and other efficiency programmes.
In October 2006, we introduced a new financial scorecard designed to deliver superior shareowner performance through a balance of revenue and margin growth over time, combined with more aggressive management of the Group's capital base. Management of the Group's capital base includes internal capital allocation decisions, acquisitions and disposals, and the return of surplus funds to shareowners by way of dividends or share buybacks.
From 2007 we will assess our financial performance against this scorecard and will build on the progress achieved in recent years by focusing our efforts on meeting these measures.
We have a business model that we believe is capable of sustainable top-line growth driven by advantaged positions in emerging markets, our strength in gum and our investment in innovation. We will maintain a relentless focus on cost and efficiency and will improve margins over time.