Wiseman shows sign of recovery

Dairy operator Robert Wiseman raised hopes today that it had got to grips with soaring overheads and the recent shake-up in the supermarket milk sector.

The group predicted profits ahead of market expectations after volumes improved and steps were taken to recover margins affected by the “exceptional” rise in costs, in particular those relating to diesel, packaging and energy.

The drive brought price rises and a cut in the amount paid to farmers for milk, although Wiseman said it still maintained a premium against the amount its rivals paid for milk. It offered 19.92p a litre in the year to January.

The optimism follows a turbulent year for the company, following a 22% drop in half-year profits in November and an overhaul of milk contracts which saw it lose deals with Asda and Morrisons but win work with Tesco and Sainsbury’s.

Analysts raised their profits expectations for this year and next year following the trading update from Glasgow-based Wiseman today.

Investec Securities analyst Nicola Mallard added £2m (€2.9m) for both years, with a surplus of £23.8m (€34.2m) now predicted for the year to April 1, compared with the equivalent figure of £25.7m (€37m) reported in 2005.

Clive Black, of Shore Capital Stockbrokers, added that Wiseman had “very effectively managed its business in recent months”.

Wiseman also said a depot opened near Northampton in November had helped deliver milk more efficiently in the South East, while it reported “good progress” on plans to build a dairy in the South West in 2007.

It also promised a £2m (€2.9m) nationwide advertising campaign for 1% fat milk product The One, which was first launched two years ago. The company recently began selling a Disney banded milk and is supplying a cholesterol reducing milk drink called Reducol to Tesco.

The company is due to report full-year results on May 15.