The Cadbury Schweppes confectionery-to-soft drinks combine has warned that its annual trading profits will be reduced by around £40 million if sterling retains its strong gains on the currency markets. First half profits suffered a sterling "hit" of £16 million calculated at rates prevailing in the middle of June, with confectionery profits reduced by £5 million and beverage profits by £11 million. But sterling continued its ascent from the middle of June and up-dated estimates based on end-July exchange rates indicate possible losses reaching up to £24 million in the second half.

Cadbury's comment on its currency exposure follows a parade of boardroom warnings on the potential impact of sterling's revaluation on profitability both directly through export order books and through translation of overseas earnings into sterling.

Cadbury's suffers on both counts, as a major confectionery exporter out of its Dublin and UK plans and as a major manufacturer in overseas markets, notably in North America. Like other leading UK combines, Cadbury Schweppes will be hoping that yesterday's sharp falls by sterling mark the turning point for the British currency.

Boardroom comment on the group's exposure to sterling accompanied financial results detailing a small £5 million increase in first half profits to £236 million after absorbing the £16 million sterling "hit". Turnover declined nearly £60 million to £1.8 4 billion.

The figures look better if sterling's revaluation is ignore and adjustments are made for disposals and restructuring. On this basis, sales and profits improved 10 per cent. Interim trading profits earned on confectionery lines declined £2 million to £103 million after taking account of the £5 million sterling "hit". Turnover was barely changed at £968 million after being reduced by £63 million through sterling's gains.