Cadbury Schweppes has warned that profit margins would remain under pressure until 2008, after pre-tax profits fell by 34% for the first half of 2007. Although sales were up 6% to £2.3bn for the six months to 30 June, chief executive Todd Stitzer said profit margins had been hit by a rise in global milk prices, due to rising animal feed costs, a drought in Australia and growing demand. The withdrawal of Cadbury from 180 cities in China will also lead to a £13m exceptional change. "We expect continued good revenue growth in the second half while margins will be impacted by the combination of growth investment and higher input costs," Stitzer added. Cadbury had earlier admitted that it could scrap the £7bn sale of its US soft drinks arm and opt for a straight demerger if deft market conditions did not improve.