Robert Wiseman Dairies, the UK milk and dairy products processor, has reported a solid start to the current financial year, with sales volumes in the first three months in line with expectations and 11 per cent ahead of last year.
Alan Wiseman, chairman, told shareholders at the company's AGM that the company had continued its rapid growth in the first quarter, with new supply contracts adding over 100 million litres per year to its milk output.
"In addition to the new business started in April with Tesco and Sainsbury's, we recently commenced deliveries to an additional 66 Somerfield/Kwik Save stores, helping the efficiencies of our Bristol and Droitwich depots," Wiseman told shareholders.
"We have also been successful in gaining an additional 42 Iceland/Booker outlets, which will commence deliveries later in the year."
But it is not just Wiseman's milk business which has been expanding. The company's potted cream business has been boosted by a new contract to supply Tesco stores from October, and the company will subsequently increase its share of Tesco's pot cream business to almost the same level as its share of the retailer's fresh milk business.
Wiseman recently reported an 11.7 per cent increase in full-year volumes to 1.03 billion litres, which in turn pushed up turnover by 5.4 per cent to £391 million (€543.8m). Operating profits for the year were up 33.3 per cent to £25.1 million, helped by a major improvement in the performance of the company's Droitwich Spa dairy, and Alan Wiseman said that production at the new facility was continuing to grow.
"Production at this facility is currently running at the equivalent of 350 million litres per annum, justifying the board's confidence in expanding its capacity, at a cost of £7.2 million, to 500 million litres per annum with effect from October 2003," he said.
Wiseman also defended his company's decision to maintain the price it pays its suppliers for its milk at a time when its major rivals were reducing their prices. "We believe it was fundamentally wrong to cut prices when all market signals point to justifying higher milk values," he said.
"We believe that milk prices will improve over the next few months, but have made it clear to our suppliers that we will have to, in due course, realign our milk price closer to that of our major competitors. Returns from sales of bulk cream have continued to improve steadily since the start of the new financial year in line with the weakening euro exchange rate."