Net profit reached GBP12.5m, down from GBP15.1m the same period last year

Net profit reached GBP12.5m, down from GBP15.1m the same period last year

UK milk supplier Robert Wiseman Dairies has today (14 November) reported a fall in its half-year profits amid cost increases.

For the six months ending October, the company posted a 41.6% drop in profit before tax to GBP11.8m (US$13.7m). Net profit reached GBP12.5m, down from GBP15.1m the same period last year.

Operating profit declined 40.6% to reach GBP12.5m for the first half of the year. Basic earnings per share was reduced by 18.5% from 21.82 pence to 17.79 pence.

The company said it had increased the price it paid for raw milk three times since March. It also cited increases in other costs, including bulk cream prices, although it expects these to ease over the winter. 

A spokesperson for the Robert Wiseman Dairies recognised the current tough and challenging environment as it is "caught in a supply chain where retail customers are under significant pressure". The company is having to bare heavy costs including oil.

He said: "We are fully aware that our retail customers are fiercely competitive and operating in a consumer environment that is challenging.

He added that the company aims to increase profits by managing the business in a professional manner and look for better market conditions by reducing the cost of utilities it has to buy.

Turnover for the period reached GBP457.7m, up 1.1% on the same period last year.

Executive chairman Robert Wiseman said the economic environment remains "difficult", which increases the challenge of recovering costs increases.

He said: "We will remain focussed on reducing costs to protect our margins for the remainder of the year and will seek to restore margins to an acceptable level as market conditions improve.

"Despite the difficult conditions, we remain confident that our first class facilities and strong balance sheet with low debt levels provide a sound basis for the business going forward."

Analyst Darren Shirley at Shore Capital Stockbrokers said he was "cautious" about the outlook for the UK dairy sector.

"The economic outlook for the UK liquid milk segment appears constrained to our minds," he said. "The supermarket segment is expected to gain share and volume at measured rates with the middle ground remaining more volatile. Supermarkets' use of milk as a footfall driver remains a source of frustration for dairy industry players, especially given its complex chill-chain and careful handling need."

However, he added: "Commodity markets are more likely than not to ease back a little to our minds, something that may both help and hinder Wiseman, with lower cream realisations offset by easier oil related costs and maybe farm-gate milk prices in time."

Wiseman, meanwhile, also announced a joint venture with New Zealand dairy firm A2 Corp. to develop a range of milk products to be launched next summer. Wiseman is set to invest up to GBP2m in the joint venture.