17 May 2002

More milk is sold but profits dip

ROBERT Wiseman Dairies has reported a dip in profits despite selling more milk during the year ending Mar 30, 2002.

Turnover rose almost 24% to £371m, but the Glasgow-based company was hit by several one-off charges during the year and tough trading conditions. These pushed full year pre-tax profits down 10.5% to £16.5m.

The main charge was the £900,000 spent reorganising the West Country-based Lordswood Dairy operations, which were acquired in May 2001. But the company also spent £700,000 on the ongoing Office of Fair Trading investigation into the middle-ground market in Scotland, and £500,000 on selling surplus milk into weak spot markets during the second half of the year.

After adjusting for these costs, underlying profitability showed a slight increase on the previous 12-month period, at £18.6m.

That equates to a 2p/litre profit, slightly less than last years figure due to a 13% rise in liquid milk throughput, to 920m litres. "While we will continue to grow and move forward, we shall not do so at the expense of farmers," said a spokesman.

The figures include the first full year of operations at thenew Droitwich Spa dairy, Worcestershire. Throughput reached the equivalent of 200m litres/year by the year-end. This, together with a new Sainsburys contract and increased business with Safeway and Somerfield, helped to boost sales in England and Wales, which now account for 60% of Wisemans output.

A fourth filling line was added at Droitwich in April, and another has been ordered, which should boost capacity to about 350m litres by the autumn.

The company expects to sell more than 1bn litres next year across the UK, giving it 17% of the liquid milk market, behind market leader Express (1.55bn litres) and Dairy Crest (1.4bn litres).

The board recommended a final dividend of 3.35p/share, taking the total for the year to 4.85p/share, 3.2% above last year.

The share price closed un-changed at 125p on Tuesday. &#42