Wiseman lifts prices as rising costs take a toll

Published on Friday 26 September 2008 21:55

ROBERT Wiseman Dairies has warned that it is pushing through a fresh round of price increases as it battles rising input costs.

Finance director Billy Keane said that since May, when the company issued a profits warning, it had faced pressure from weak cream prices and increased oil and utility costs.

The rise in the cost of oil has had a wide-ranging impact at the East Kilbride-headquartered company, with plastic costs hitting record levels last month.

A spokesman said the move to hike prices had been well flagged with customers, with whom he said the firm had a "transparent" relationship.

He added: "With continued rises in our costs and the costs to farmers who supply us we're going to seek a higher selling price – I don't think it is a surprise to any of our customers.

"We're now working through this with our customers and we're confident that we'll be able to achieve a higher selling price for the products we supply."

Supermarkets have been engaged in a price war in recent months, with milk featuring heavily in some promotions. However, Wiseman declined to comment on the impact on the business.

"The retail prices of milk are the preserve of retailers," the spokesman added.

Willie Lamont, chairman of NFU Scotland's milk committee, welcomed news that the firm would increase payment to farmers, but called for a significant increase, claiming research showed that the cost to farmers of producing milk will increase by a further 3p per litre by March 2009.

"While the scale of the increase to be delivered to Wiseman's farmer suppliers is not disclosed, the reality is that this needs to be pennies more per litre rather than fractions of pennies," Lamont said.

The Wiseman spokesman conceded that farmers were facing increased feed, fertiliser and utility costs "and we feel the prices we pay have to reflect that".

Despite the setbacks earlier in the year, Wiseman said it expected to meet profit expectations for the full year. The company held a briefing for analysts at its new Bridgwater facility in Somerset, which it said was performing to plan.

Wiseman has also bought land for a new distribution depot in Wiltshire for 4.5 million.

Keane said: "This depot will help us deliver more efficiently to the considerable business we are building in the south-east of England."

Shares in Wiseman closed up 0.75p at 329p.