UK dairy group Robert Wiseman Dairies saw annual profits decline by almost a quarter in its last financial year, as the company’s margins were hit by increased competition and higher costs.
The group said today (17 May) that for the year ended 2 April, net profit was down 24% to GBP27.1m (US$44.1m).
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Operating profit declined 29.7% to GBP35.3m (US$57.4m) while adjusted operating profit margins were down to 4.1% from 5.5% a year earlier.
The company said that over the last year, all of the major retailers put their milk supply contracts out to tender and the convenience and wholesale sectors of the market have seen “heightened levels of competition to supply”.
Although increased competition hit Robert Wiseman Dairies’ margins, the company said it was “pleased with the outcome of the tenders in volume terms”, as it has either “grown or retained business” with all of its key customers.
Increased volumes drove rising turnover. Revenue grew 3.5% to GBP917.3m.
The group said it has increased its share of Tesco own-label supplies, “consolidated” its position as Sainsbury’s fresh liquid milk supplier and made “significant progress” with The Co-operative Group, where it said it will be supplying all its own-brand fresh milk products from August.
The group’s chairman, Robert Wiseman, warned of the impact of rising costs on the group’s margins in the year ahead. He said that, at the end of March, higher input costs amounted to a GBP5m annualised increase in the dairy group’s cost base. Since then, he said, costs have continued to rise.
“Currently the costs of the resin used to produce plastic bottles and fuel are respectively 20% and 13% higher than the average costs incurred in the year to March 2011. Whilst the longer-term outlook remains uncertain, were these to stay at their present levels through to March 2012, the annualised increase in our cost base for resin, fuel and other costs would now be in the order of GBP7.5m,” he said.
Shares in the group were down 2.24% to 327.50p a share at 11:24 BST today.
