Wiseman ups farmgate milk payout, sales on track
full year results will be in line with analysts' expectations and
has pledged to up its average farmgate milk price for the first
time in over a year, Tom Armitage reports.
In a trading statement released earlier today, Wiseman described both its sales and turnover as "satisfactory" and vowed that it would fight to retain its lucrative supply arrangements with some of the UK's major multiple retailers.
The company noted that its arrangement to supply Sainsbury's, the UK's third largest multiple retailer, with liquid milk earlier this year was "settling in well" and added that a deal to continue supplying number one supermarket retailer Tesco with liquid milk was nearing completion.
Since losing a £70 million contract to supply Asda with fresh liquid milk last year, Tesco and Sainsbury's have each upped their volume demands by around 20 and 30 per cent respectively.
"Despite the market place remaining fiercely competitive, we are optimistic that we can maintain our current market shares of the major multiples. Indeed, we have had discussions in recent weeks with some of our customers regarding extending current arrangements beyond their present term," Wiseman said in a statement.
According to brokers Investec, Wiseman's full year results are likely to be in line with expectations (although down on the previous year), with operating profits expected to be around £25.8 million (pre-goodwill) when announced on 16 May later this year.
"This has been a difficult year for the UK's milk processors, which have all been adversely affected by deteriorating prices and cost pressures, particularly rising plastics and energy costs," Investec analyst Nicola Mallard told DairyReporter.com.
Indeed, Arla Foods' UK division, a subsidiary of Danish-Swedish dairy co-operative Arla Foods, looks set to be the only major milk processor to notch up an increase on the previous year's profits.
Despite this, however, Glasgow-based Wiseman pledged to increase the price it pays suppliers for their milk - for the first time in over a year - to around 20p per litre.
Similarly, UK dairy co-operative Dairy Farmers of Britain (DFOB) confirmed earlier this week that it would be increasing its farmgate milk price to around 18.5p per litre, while Arla Foods and Dairy Crest were still in discussions with producers.
Wiseman warned, however, that this latest positive price movement was subject to it maintaining its long-term competitiveness against other processors.
Bulk cream selling prices, for instance, continue to slide, stemming from a drop in demand and imminent cuts in CAP support payments.
