Shares in Robert Wiseman Dairies rose today (11 March) after the UK group said annual profits would beat expectations, although it warned of a change to its own-label milk contract with Tesco.

Wiseman shares were up 1.4% to 316.5p at 09:37 GMT this morning following the company's declaration that it was "confident" of booking annual profits "ahead of market expectations".

The company said sales and volumes for the year to 4 April were "in line with forecast" and that its margins had improved during the second half of its fiscal year due to falling farm-gate prices.

However, Tesco, the UK's largest retailer, had decided to "rebalance" its own-label milk range for the next 12 months, Wiseman said.

As a consequence, Wiseman 's share of Tesco 's private-label fresh milk range would fall from 60% to 50% from May. The dairy firm said the fall in volumes would hit operating profits in the year to 3 April 2010 by GBP2m (US$2.7m).

Nevertheless, Wiseman insisted it had seen "rapid growth" in the sale of its branded milk products to Tesco. Sales of brands including Fresh'n'Lo and the One to Tesco had doubled in the last year, the company said.

""While we are naturally disappointed with any decision that results in a reduction in the volume of milk supplied to Tesco, even in the short-term, we are confident that with our brands growing strongly we can continue to develop our business with Tesco, and our other customers, in the period ahead," said chief executive Robert Wiseman.

The company is scheduled to issue its preliminary results on 17 May.