Robert Wiseman Dairies has announced that pre-tax profits fell by 36.6% to £11.6m during the first half of the current financial year, due to higher costs and “challenging” market conditions.

The firm’s interim results for the six months ended 27 September 2008 showed that while sales volumes increased by 2.6% to 765.3 million litres and turnover hit a record £396.3m (£327.6 m in 2007), gross profit fell 1.2% to £83.2 million (£84.3m in 2007), due to higher packaging, energy and processing costs.

These higher costs and delayed implementation of selling price increases in April and May meant operating profit also declined, by £6m (31.0%) to £13.3m, equivalent to 1.74p/litre sold (compared with 2.58p/ litre in 2007).

A “heavy capital expenditure programme”, which included the new facility at its Bridgwater dairy, meant finance costs rose by 66.2% to £1.8 million (£1.1m in 2007).

“Despite very challenging conditions, which include a recent sharp decline in the value of cream and consequent impact on our profitability for the second half-year, the group is well positioned for the future,” chief executive Robert Wiseman said.

“With a robust balance sheet, excellent cash flow and volumes increasing at our new dairy in Bridgwater, we are in an excellent position to continue our track record of volume growth and to rebuild operating margins.”