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January 16, 2012

UK: Muller target Wiseman warns on profits

UK milk supplier Robert Wiseman Dairies has warned that its profits could come under pressure if raw milk prices fail to come down or the price it receives for milk does not increase.

UK milk supplier Robert Wiseman Dairies has warned that its profits could come under pressure if raw milk prices fail to come down or the price it receives for milk does not increase.

Wiseman, which is the subject of a GBP279.5 takeover bid from German yoghurt maker Unternehmensgruppe Theo Müller, said the value of bulk cream had fallen over Christmas, which could have an impact on the profits the company has generated in recent months.

In a trading update for the 15 weeks to 14 January, Wiseman said: “Bulk cream prices remained strong prior to the Christmas period.  As with previous years bulk cream values reduced over the Christmas/New Year period and are for this period below the levels attained earlier in the year.

We wait to see if prices will recover in February and March, but if the current levels were maintained, profits generated in the last quarter may be impacted unless there was either a compensating reduction in raw milk prices or increased milk selling prices which are both unlikely to be achieved prior to 1 April.”

It added: “Oil costs have remained volatile in recent weeks and diesel costs remain at a high level. The cost of plastic has, however, reduced slightly but this benefit has been absorbed by the shortfall in cream revenues and the continued margin pressures experienced.”

Wiseman, which supplies milk to UK retailers, said its turnover and trading had been “in line with expectations” over the period. Volumes remained flat as the gains Wiseman has secured from retailers including Aldi was offset by the end of supplies to Asda.

In a separate statement to the London Stock Exchange, Wiseman’s board declared Müller’s bid as “fair and reasonable” and said investors representing over 59% of the company had indicated that they intend to accept the offer.

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