ROBERT Wiseman Dairies warned yesterday that renewed pressure on its cost base was likely to prompt further milk price rises.
The East Kilbride-based company said it was currently implementing a price increase with its customers after further hikes in input costs. Wiseman said diesel prices were about 20 per cent above the level of last summer, while the Platt's resin inde
x – a tracker of plastic costs – had reached £990 a ton, about £100 a ton higher than mid-2007.
Wiseman also said it was planning to increase prices paid to farmers. Last September, Wiseman said it had increased the average price it paid to farmers by more than a third, from 18.7p per litre to 25.7ppl.
Yesterday, a spokesman for the firm said that despite a fall in bulk cream prices, which would typically prompt a cut to farmers, the company was planning to increase the price in a bid to secure supply, with competition from rivals, and other farming sectors, such as wheat, proving increasingly profitable.
He added: "The reality out there is that the costs that farmers are facing means we do need to act to protect sufficient supplies to run our business – we're aware that dairy farmers have choices."
The spokesman declined to elaborate on the increased payments to farmers, or disclose the price increase to customers, but said they were "only reasonable".
Wiseman revealed a slight increase in costs and delays in commissioning at its new Bridgwater dairy in Somerset. The group said contractor delays meant the commissioning of the third filling line in the first phase of the plant would not take place until the start of May, adding £1 million of costs to the start of the next financial year, as expected synergies are delayed.
Wiseman has also notified staff at the small Pensilvsa dairy unit in Cornwall of plans for formal consultation over shutting processing operations at the site.
The spokesman said that, given the relative cost of processing milk from the plant, the company had "no option" but to assess its viability, though he pledged that the company would maintain at least a distribution operation at the site.
Overall trading remained in line with expectations, Wiseman assured investors. House broker Investec is forecasting the company will bank a pre-tax profit of £37.5m on revenues up 18 per cent to £716m.
Wiseman said some of its niche products had been performing particularly strongly.
Sales of "the One", a product with 1 per cent fat, have risen 34 per cent over a year ago following a £2m advertising campaign. Sales of Tesco Pure and Purity – extended shelf-life products – are up 25 per cent on a year ago.
Shares in the company, which have fallen sharply in recent days, bounced back yesterday, closing up 5.6 per cent at 451.5p.
The full article contains 479 words and appears in The Scotsman newspaper.
