City: Will Robert Wiseman build another dairy?

The firm, which posted an 11.6% rise in first-quarter sales volumes, will complete a project to take capacity at its new Bridgwater dairy in Somerset up to 500m litres in November, but has so far declined to comment on whether it plans to build another dairy​ after that.

Shore Capital analyst Clive Black said he believed it was possible that a further 250-500m-litre dairy could be operating by 2015.

“Despite the expansion we expect Wiseman will be running at near capacity in England and we await the company’s next strategic move; a move that really sets out whether Wiseman ‘milks’ its current asset base for the foreseeable future within a relatively settled’industry (we still look with interest towards Arla’s plans in the industry) or considers developing another major dairy in England.”​

He added: “Such an announcement may not come quickly or, indeed, at all but with Bridgwater completed later this year the next phase of Wiseman’s development becomes a greater talking point at least for investors to our minds.”​

A spokesman for Wiseman told FoodManufacture.co.uk that taking Bridgwater to 500m litres would create “considerable headroom for continuing our growth”​ and while it had no immediate plans to build another ‘super’ dairy, it would “never rule anything out”.​

He added: “We are always alive to opportunities, and don’t forget that we are investing heavily in our existing network and there is also room for expansion at several of our sites.”​

Higher plastic and fuel costs​

Chairman Alan Wiseman said the group’s financial performance had been “satisfactory in the first three months of the year”.​

Although bulk cream returns had remained stable in recent months, the costs of plastic and fuel were higher than those incurred in the same period last year, he said.

“The recovery of these additional costs, and the objective to rebuild our underlying operating margins, remains of primary importance.”​

Shore Capital’s Clive Black added: “We believe current forecasts are underpinned by the ongoing strength of cream prices, though if commodity prices were to fall then recovery from the retail market may yet be required.”​

Arla's London 'super dairy'​

While rival Arla's proposed 1bn litre 'super dairy' in Greater London would shake up the UK liquid milk market, it was unlikely to increase overall capacity in the market significantly as Arla would probably close plants in Ashby, Hatfield Peverel and Oakthorpe when the new dairy came on-stream, predicted analysts.