Cost pressure brews as Robert Wiseman beats expectations

By Guy Montague-Jones

- Last updated on GMT

Related tags: Robert wiseman

Robert Wiseman has announced that full year sales and profits will beat expectations but warned that higher diesel and packaging costs may put pressure on margins in the new financial year.

In a pre close trading update, Robert Wiseman said that in January the company had revealed that volumes were running slightly ahead of expectations and this trend has since continued.

Higher volumes

Overall milk volumes for the year were 11 per cent higher than the previous financial year on a like-for-like basis. Robert Wiseman was able to accommodate this increase thanks to capital investment that included a project to increase capacity at its Bridgwater dairy by 375 million litres per annum.

This was completed slightly ahead of schedule and on budget just before Christmas 2009, and will be followed by a final phase of expansion at the plant that will take capacity to 500 million litres by October 2010 at a cost of £10 million.

For the year ending 3 April 2010, margins and profits were given a boost from December onwards by a spike in bulk cream prices. Robert Wiseman said this provided a one-off benefit that is unlikely to be repeated in the forthcoming year.

Cost threats

Looking ahead to next year, the company also warned that certain costs appear to be on the rise.

Robert Wiseman said oil related costs are on the rise and diesel costs will be affected next by duty increases, which kick off with a one penny per litre rise from 1 April.

In addition, there has been upward movement in the Platt’s resin index for HDPE. Robert Wiseman said this impacts plastic bottle costs, and it remains a concern that this upward trend will continue into the new financial year.

Nevertheless, Robert Wiseman’s group finance director, Billy Keane, said: “Looking forward to next year, we are in good shape with volumes growing, a sound balance sheet, low gearing and state-of-the-art facilities.”

Related topics: Manufacturers

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