Wiseman profits hurt by rising costs

Pre-tax profits at Robert Wiseman Dairies, which supplies a third of the fresh milk consumed in the UK, fell 42 per cent to £11.8m in the six months to October 1.

It has put up prices to its farmers three times since March as they struggle with higher fuel prices, while plastic resin used in its bottles has also risen.

Wiseman warned the squeeze on its margins could intensify if costs rise further but it hopes to make efficiency savings to offset the pressures. It said it will seek to “restore margins to an acceptable level” as market conditions improve.

Glasgow-based Wiseman also said a new organic milk contract with Tesco will help it boost volumes.

And it unveiled a £2m tie-up with a New Zealand dairy that will allow it develop a type of milk that can be drunk by people who are intolerant to milk but are not diagnosed as lactose intolerant.

It has formed a joint venture with A2C, which sells a range of a2-branded milk products that do not contain a type of protein that can cause digestive discomfort and have proved popular in Australia.

Wiseman hopes to launch similar products in the UK next summer as part of its Bringing People Back To Dairy initiative.

Studies have shown that as many as one in five people find it hard to digest milk but only one in 20 in the UK are believed to be lactose intolerant.

Wiseman’s turnover increased one per cent to £457.7m in the half year, in what it described as a “robust performance” that benefited from a deal to supply all The Co-operative Group’s own-label milk from August.

Shares in Wiseman were up one per cent yesterday. Nicola Mallard, an analyst at Investec Securities, said profits were ahead of expectations. She added: “The environment for liquid milk remains difficult, with retailer selling prices reduced again in the new round of price competition and further raw milk price increases implemented in recent months.”