Wiseman closes Fife depot

Published on Thursday 31 March 2011 15:37

Robert Wiseman Dairies yesterday confirmed it would close a depot in Fife this month, as tightening margins eclipsed an increase in sales.

In a pre-close trading update, the Scottish milk firm said it had seen sales rise in recent months thanks to increased orders from Tesco and the Co-op.

But the East Kilbride-based company continues to be squeezed between rising costs and a highly competitive marketplace for its products. Wiseman said it had entered discussions on increasing prices across its customer base, but since starting the process there had been further "significant" increases in diesel and plastic costs.

"It is unclear whether these most recent increases in costs are reflective of short-term volatility or will become established for the longer-term ," it said.

The firm said it was therefore focusing on efficiency and reducing costs, including the closure of two sites, he distribution depot in Cupar and a small dairy in Devon.

The closures will cost Wiseman 1.9 million, but produce long-term savings.

Despite assurances that it will deliver results in line with expectations, analysts showed concern at the company's tightening margins.

Shore Capital yesterday downgraded Wiseman from "hold" the "sell", citing "continuing uncertainty about input prices and the pressurised consumer environment" for its decision.