Wiseman milk price warning as costs soar

Robert Wiseman Dairies today warned that soaring energy and wage costs will hit profits this year, and could force it to push through yet more increases in the price of milk.

The firm said "unprecedented" rises in the cost of diesel and other energy and in staff wages have forced it to put up milk prices but delays in these increases will knock £3 million off its profits in the first quarter.

Chairman Alan Wiseman warned it will take a further £2 million hit to profits this year if it does not put up prices again - bad news for millions of families who have seen food prices rocket in the past year. Overall, he said profits could be reduced by £8.5 million this year.

It is reckoned many households are spending almost £1000 a year more on food as a result of price rises driven by a worldwide crisis over supplies of key crops such as corn, wheat and rice. Increases in the cost of food and oil have pushed the official rate of inflation well above the Bank of England's 2% target.

Wiseman today said it has started to push through increases in milk prices to deal with "the exceptional boom in commodity prices", although there have been delays in forcing these changes through.

He added: "Costs have continued to rise since negotiations with our customers began, which will have a further impact on the outcome for the current year. If they continue at present levels and are not mitigated by another selling-price increase, we currently envisage that this could further impact on operating profit by up to £2 million in the year."

Wiseman said prices of milk continued to remain high in Britain as farmers-fail to increase production because of higher costs. He added: "In recent months, we have faced an accumulation of cost and revenue pressures that will, disappointingly, impact our profitability in the current year."

Profits fell 11.3% to £31.6 million last year as the higher costs overshadowed a 19.3% rise in turnover to £722 million. The dividend is up to 14p from12p.