Wiseman warns on milk price

ROBERT WISEMAN Dairies has unveiled what it called solid financial results for the 12 months to April, despite a large fall in profits.

Nearly 20% was wiped off the milk processor’s operating profits last year by the rising cost of oil and a cut-throat struggle for supermarket business.

Though turnover increased 3% to £489m, profits fell from £30.6m in 2003/04 to £24.6m last year.

Liquid milk volumes have grown 2.2% to 1.21bn litres over the same period, despite the recent loss of a 120m litre Morrisons contract.

Chairman Alan Wiseman said the industry should now enjoy a period of greater stability, but a spokesman warned said price differentials between Wiseman and competitors Arla and Dairy Crest were unsustainable.

Fierce competition for growth in the middle ground meant no let up in price pressure, he added.

The company’s milk price will be held at its current level until June, with negotiations on a new price in July.

Wiseman has also confirmed that plans for a new £30m dairy in the southwest of England were on track, along with building work on a new depot in Northampton.

It is also two months away from launching a new extended shelf life milk, initially for sale under the Tesco brand.

Wiseman shares, which dropped 11% on news of the Morrisons decision at the start of May, were up nearly 2% to 246p.

Nicola Mallard, an analyst with Investec, said the results were broadly in line with expectations, but predicted business would become more difficult when the company stopped supplying Morrisons in October.

It would cost the company £1-2m in profits this year, as utilisation in its key Scottish dairies dropped, she added.