The collapse of Dairy Farmers of Britain - the UK's fourth-largest liquid milk supplier - in June translated into impressive volume gains for rival Robert Wiseman Dairies.
Robert Wiseman's sales volumes climbed 11.3 per cent to 851m litres as Dairy Farmer's customers sought out alternative suppliers. This included 116m litres of additional volume with the Co-operative Group - Wiseman had, in fact, already won this business, but in the end supplies commenced two months earlier than anticipated. It also started supplying 137 Sainsbury's Local stores, which offset an estimated 20m litre reduction in volumes to Tesco as it rebalanced its supply base.
Higher volumes were partly behind a significant uplift in operating profits. Wiseman generated a profit of 2.54 pence per litre (ppl) in the period, well above last year's low water-mark of 1.74ppl, thanks to more stable costs and improved bulk cream prices, which more than compensated for a 3.9 per cent drop in raw milk prices.
Investment in modern plant is also helping. Wiseman has invested £430m since 1994, including a recently opened £15m depot in Wiltshire and an additional 125m litres of annual capacity due to come online in December, at a cost of £7.5m. The new capacity will help the company eliminate less-efficient Sunday production.
Broker Investec Securities expects underlying full-year pre-tax profits of £40m and EPS of 39.2p (2009: £32.6m/31.5p).
ROBERT WISEMAN DAIRIES (RWD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 477p | MARKET VALUE: | £346m | |
| TOUCH: | 475-485p | 12-MONTH HIGH: | 483p | LOW: 282p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 195p | NET DEBT: | 19% | |
| Half-year to 3 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 396 | 11.6 | -13.8 | 5.00 |
| 2009 | 424 | 21.0 | 20.9 | 5.75 |
| % change | +7 | +81 | - | +15 |
Ex-div: 23 Dec Payment: 4 Feb | ||||
