The UK's Robert Wiseman Dairies has said its sales volumes and turnover for the six months to 1 October 2005 are in line with its forecast and the company is confident it will deliver results that are in line with current market expectations.

During the six-month period, the company commenced a significant new store allocation with Tesco, which boosted volumes at existing depots at Droitwich,
Bristol and Taunton, as well as the company's temporary depot at Peterborough. This depot will, as planned, be replaced in November by a new £7.5m (US$13.3m) depot at Northampton, which will assist efficiencies in servicing Robert Wiseman's customer base in the southeast of England, the company said.

"As previously announced, we will cease own label supplies to Morrisons from late October. As a result, we propose to cut back on production volumes at our Glasgow and Aberdeen dairies," group finance director Billy Keane said, adding that this may lead to some redundancies.

"Despite the loss of Morrisons, we still anticipate the full year will be a record one for the company in terms of volume and turnover. We are pleased to have secured long-term volume growth for the business and look forward to developing our position as a key supplier to all our major customers including Tesco, Sainsbury's, and Somerfield," Keane added.

The company said it is currently finalising a legal agreement to purchase a site for a new southwest dairy near Taunton, enabling the company to transfer its current workforce from the leased depot site in that area. The total cost of the project is estimated to be £30m, with the dairy expected to be operational in spring 2007 with an initial capacity of 200 million litres.

Robert Wiseman also said that inflation in oil related costs is a concern for the company.

"Although this was to some degree recovered through the achievement of higher milk selling prices in March, the recent continued rise in derv and plastic, together with anticipated higher energy costs, has eroded the effect of this increase. Similarly, competition in all sectors of the market is intense and makes recovery of these increased costs uncertain," the company said.