Your Daily Pinta Could Cost You a Lot More Thanks to Soaring Operating Costs

Consumers could face further milk price rises due to soaring operating costs, producer Robert Wiseman Dairies said yesterday.

The company, which produces about a quarter of the UK’s milk and which operates a major production plant at Droitwich, said the price of diesel had risen 12 per cent since the summer while plastic used for packaging was also at a record high this month. "If these costs persist, they are likely to require an increase in our selling prices to maintain operating margins," the firm said in a trading update.

Robert Wiseman said the price it paid to farmers had gone up by more than a third over the past 12 months. Customers have been handed virtually all of these increases.

The group, which supplies supermarket giants Tesco and Sainsbury’s as well as other retailers, added that it was balancing higher operating costs with downward pressure on commodity milk prices. Bulk prices for cream have fallen by nearly 25 per cent in the last quarter, it said.

But management said they had decided to hold farm gate milk prices for the next month to see if the bulk price weakness is short- lived.

Yesterday rival and Cathedral City cheese maker Dairy Crest said it had managed to pass a 35 per cent milk price increase directly on to customers.

Robert Wiseman said it was on track to produce 1.5 billion litres of milk this financial year. It introduced lighter bottle tops last in a bid to save on costly plastic.

"The challenges presented by rising costs and volatile commodity pricing are familiar ones, which we expect to be satisfactorily dealt with in the period ahead," the group added.

A new dairy at Bridgwater in Somerset came on line before Christmas, and is set to produce 250 million litres of milk by this April before eventually doubling its capacity. Robert Wiseman operates other dairies in Aberdeen, East Kilbride, Glasgow, Manchester, Okehampton in Devon and Pensilva, Cornwall.

The group said its full year results to March should be in line with market expectations.

Broker Numis said it expected Robert Wiseman’s pretax profits to March to come in at pounds 36.5 million, compared with pounds 33.8 million the year before.

Shares closed unchanged at 530p yesterday.

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