Robert Wiseman to cream off higher profits

Published on Saturday 15 May 2010 14:03

ROBERT Wiseman Dairies will deliver an uplift in profits tomorrow after the Scottish milk producer picked up a number of big contracts.

The group also got off more lightly than expected last month from an Office of Fair Trading investigation into the sector that saw its fines cut for price-fixing in milk and butter.

Wiseman, based in East Kilbride, is Britain's leading supplier of fresh milk, having picked up contracts for an extra 25.5 gallons of milk with the Co-operative supermarket group when the Dairy Farmers of Britain co-operative went into receivership last June.

Wiseman already had supply contracts with the Co-op food retailer for 31.2 million gallons of milk, and it took its market share in Britain to 30 per cent, as it also picked up two substantial wholesalers to the Spa chain in the year, Cappers and Blackmore.

Rivals Arla and Dairy Crest are both estimated to have market shares in the procurement, processing and delivery of milk of about 29 per cent each.

One dairy industry analyst said: "Clearly Wiseman has benefited strongly this year from the problems at Dairy Farmers of Britain. It reduced the field to three leaders and its recent trading has been strong."

The City consensus forecast for Wiseman's pre-tax profits is 45.5m against 32.6m in the previous year, and the total dividend to rise to 18p from 15p.

Wiseman sparked profit upgrades when it said in a recent update it was confident profit would exceed expectations.

It is believed rising commodity prices will have been a bittersweet cocktail. The company produces bulk cream as part of its normal milk processes – 25 per cent of which goes to its UK retail customers and 75 per cent for export to be used in a variety of products.

One industry executive said: "The value of that cream depends on the state of commodity markets and those have been strong."