Wiseman Half Year Results
15/11/10 -- Scottish dairy group Robert Wiseman have released their half year results to October 2 today, reporting a 3.5% drop in profits to GBP20.2 million.
That's probably just be the tip of the iceberg, as they warned on full-year profits in September, saying that a GBP7 million hit was on the cards for H2 of this year, followed by a further GBP16 million hit potentially looming for 2011/12.
One of the main reasons for the forthcoming drop in profits is thought to be Wiseman's having to slash the terms of it's new contract with Tesco (who else) in order to retain their business.
Wiseman Shares Lose 26 Percent
Shares in Scottish-based dairy business Robert Wiseman are down by more than a quarter today after it said tough competition in the milk market will wipe GBP7 million off it's financial year operating profits to April 2011. A further GBP16 million will disappear in the FY ending in 2012, it added, following "recent intense competitive pressures across all sectors of the market."
Just after noon Wiseman shares stood at 360p - down 125.5p, or 26%, on the day.
Shares in Dairy Crest were also down sharply.
That doesn't bode too well for further milk price increases to help pay the rising feed bill does it?
Wiseman Ups Milk Price
In a smart attention-grabbing move, Robert Wiseman Dairies have increased it's milk price effective from 1st August, guaranteed for two months.
OK, it's only 0.3 ppl to 24.32 ppl, but every little helps.
Stronger returns from bulk cream in the last quarter are actually being passed on, at least in part, to milk producers. What a novel idea!
Wiseman Strikes New Deal With Co-op
Robert Wiseman has announced that it will commence supplying to The Co-operative Group with an additional fresh milk volume from August 2009 equivalent to approximately 116m litres on an annualised basis.
The Company currently supplies The Co-operative Group with circa 142m litres per annum across Scotland and the South of England, and has confirmed that it has been awarded the contract to continue with these supplies from August 2009.
The additional 116m litres of volume will be delivered to The Co-operative Group's regional distribution centres in the North of England.
Robert Wiseman, Chief Executive of Robert Wiseman Dairies said:
"The Co-operative Group has been an important customer for many years, and we are very pleased to extend our relationship by supplying this additional volume.
"We have an efficient and well invested network of dairies covering the country, a sound balance sheet and we move into the new financial year with confidence."
Tesco Cuts Wiseman Contract, Ups Arla
Robert Wiseman says it is confident that it will exceed profit forecasts for the current financial year to April 2009.
Things don't look quite so rosy for 2009/10 however, following news that Tesco is to reduce the amount supplied by the group in it's own-label milk from 60% to 50%.
The Tesco cut, which takes effect in May, is expected to amount to a not insignificant 40 million litres of milk.
Arla meanwhile will see their share of Tesco's own-label milk increase from 40% to 50%.
Robert Wiseman Dairies Interim Results 2008
Financial Highlights
> Sales volumes up 2.6% to 765.3 million litres (2007 : 745.6 million)
> Turnover increased by 21% to a record £396.3 million (2007 : £327.6 million)
> Operating profit decreased by 31.0% to £13.3 million (2007 : £19.3 million)
> Operating profit per litre 1.74 ppl (2007 : 2.58 ppl)
> Earnings per share reduced to a loss of 13.84p (2007 : profit of 18.82p)
> Adjusted * earnings per share decreased by 36.4% to 11.13p (2007 : 17.50p)
> Interim dividend of 5.00p per share, an increase of 25% (2007 : 4.00p)
> Net debt lower than expected at £50.2 million (2007 : £44.0 million)
* In the current year there is a one-off deferred tax charge of £17.9 million arising from a change in legislation to phase out Industrial Buildings Allowances. In the prior year there was a deferred tax credit arising from the change in the corporation tax rate from 30% to 28% of £1 million.
Wiseman And Arla Announce Milk Price Increases
Robert Wiseman has announced that its farm gate milk price would increase by 1p/litre from 1 November 2008, taking a standard litre to 27.2p/litre. The company said it would also increase prices during October, once negotiations with customers had concluded, thought to be sometime within the next fortnight.
Meanwhile, Arla said it would increase the price for milk supplied by members of its dedicated supply group, Arla Foods Milk Partnership (AFMP), by 1p/litre, with effect from 13 October 2008. That increase would take its standard milk price to 27p/litre and was in addition to the volume bonus announced at the beginning of October.
Wiseman Opens GBP80 Million Somerset Dairy
Robert Wiseman Dairies opened what they say is Britain’s most efficient and environmentally advanced dairy yesterday.
The £80million development has been created at Bridgwater in Somerset.
It has the capacity to process and pack 10% of Britain’s fresh milk requirements and has been specially designed to reduce energy, water and plastic use, as well as food miles.
The site already has capacity for 250million litres (54.992million gallons) of milk a year but chief executive Robert Wiseman used the opening to say the firm had already started work to lift this to 350million (76.989million gallons). The site when fully utilised will have the ability to process about 500million litres (109.984million gallons).
He added: “Bridgwater is the largest single investment in the British dairy industry to date, and we believe it represents a step change because of the focus placed on use of energy, water, materials and waste.
“It is located in the heart of one of Britain’s largest milk-producing areas, which keeps farm tanker miles to a minimum.
Wiseman now processes and distributes milk from 22 sites across the UK from Cornwall to Aberdeen. It employs more than 4,500 people.
The firm supplies 27% of the UK’s fresh milk needs and last year processed 1.5billion litres (329.953million gallons).
Wiseman price increase "a small step in the right direction"
A 0.5 p per litre price increase announced by Robert Wiseman Dairies today as a move in the right direction needs to be followed by other players in the milk game.
NFU Scotland says whilst the new farmgate price of 26.2 ppl is an improvement, there is little cause for celebration given that it is still below the cost of production which is closer to 29ppl.
And while Wiseman has highlighted a 40% increase in the farmgate price paid to its suppliers in the last full year, NFUS points out that the cost to a dairy farmer of producing that milk has increased by at least the same amount over the same period of time and is still increasing.
"A small number of companies, Wiseman included, have been working hard with their customers to highlight the impact that rising costs are having on their business and the businesses of those who supply them with milk," said NFUS milk committee chairman Willie Lamont.
"Others now need to step up to the plate. It is recognised that an upward move in the prices paid to its dairy farmers is required to instil confidence.
"Robert Wiseman Dairies is the first major milk processor to have announced such an increase and we need others to follow suit quickly."
Mr Lamont says against a background of increasing global and home consumption of milk and dairy products, the outlook is bright for the dairy sector.
"However there are massive short term cost pressures for farmers who are facing rocketing fuel, feed and fertiliser costs and extremely high prices for replacement cows," he says.
"These costs need to be recognised now and the Wiseman move is a small step in that direction."
