Dairy company Robert Wiseman Dairies plc profits fell in the year to 2 April 2005 after a series of changes in milk supply contracts by the big supermarkets.
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Sales rose to £489.2m (US$900.6m) from £474.5m the year before, but pre-tax profit was down to £24.6m from £30.6m the year before.
“The growth in volumes in the period was achieved in a volatile period in the milk industry, and the loss of the English ASDA business in November 2004 had a particular impact on our margins as the new business for Sainsbury’s did not commence until January 2005,” the company said. “Additional volumes with Tesco, amounting to 180m litres per annum, commenced in April. Given that the new business with Sainsbury’s and Tesco was pending, the business did not have an opportunity to rationalise its cost base when the ASDA volumes were lost in this period.”
“Additional costs were actually incurred as the Group prepared to service this new business,” it said. “Rising oil costs resulted in a significant increase in the cost of diesel and electricity, and plastic resin costs also rose significantly during the year. Increased prices to mitigate these higher costs were implemented in March and April 2005.”
“We believe that with all the major retailers now having made their decisions about supply arrangements, we can look forward to a period of greater stability within the industry,” said chairman Alan Wiseman.
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By GlobalData“For Robert Wiseman the net result of these contract changes in terms of volumes sold is expected to be broadly neutral” he said. “We continue to enjoy strong organic growth from our multiple retail customers who are still winning market share from declining doorstep sales.”
