Wiseman job losses feared as milk price wars hit profits

ANALYSTS fear job losses could be on the cards at Robert Wiseman Dairies as the East Kilbride firm struggles to overcome the impact of supermarket milk price wars.

The long shadow of recent aggressive discounting by the major supermarket giants will hang over the dairy company when it pours out interim results tomorrow alongside its fight-back strategy against new rivals.

Wiseman is set to stress a redoubled drive for efficiencies to combat the tougher climate, and job losses are unlikely to be ruled out.

The group will also claim the ramping up of milk production at its Bridgwater dairy in Somerset this month will help it fight what one industry executive called "an unprecedentedly tough" market in fresh milk.

Wiseman is expected to emphasise that its central strategy is to protect volumes, even if that means sacrificing profit margins in short-term.

The Bridgwater depot opened in 2007, but is adding another 150 million litres of milk to take production up to 500 million litres.

A profits warning from the group jolted the City in September when it said new milk industry entrants would hurt its profits this fiscal year and in 2012.

Meanwhile, Asda has slashed its retail price of four pints of milk from 153p to 125p, with Tesco - to whom Wiseman is a big supplier - also sharply reducing prices.

The Scottish company revealed at the time of the trading update that there was more capacity in the market following the demise last year of co-operative Dairy Farmers of Britain (DFOB).

Wiseman has said some of those assets have been snapped up by new milk producers, thereby also intensifying competition in the corner shop milk market.

One milk industry executive told Scotland on Sunday: "The supermarkets have always been very competitive on milk pricing and that has worsened.

"But it has been aggravated by aspirant smaller milk companies picking up some of the DFOB assets, and selling milk on to corner shops at very cheap prices which has now also destabilised that market."

A City analyst said: "One of Wiseman's strengths in the current terrible climate is that it has virtually no debt. This will help if it has to sacrifice some margin to fight off interlopers."