3 July 2008 - Chairman, Alan Wiseman, will make the following comments about trading when he addresses shareholders later today at the Robert Wiseman Dairies PLC 2008 Annual General Meeting:
"We are pleased to report that sales volumes in the first three months of the new financial year are satisfactory and some 2% ahead of the same period last year.
Following a supplier base review by Netto, we have recommenced supplies to 131 stores in England and Wales that had transferred to a competitor in October 2007. We also commenced supplies on a nationwide basis to the Martin McColl Group of convenience stores in June. Sales of "the One", our 1% fat milk brand, and our Extended Shelf Life milk continue to make good progress in a very competitive marketplace.
We are encouraged by customer reaction to our Bridgwater dairy and volumes at this new state-of-the-art facility are building in line with our expectations. Likewise, anticipated savings in haulage costs from reaching capacity of the first phase will be realised in full from July 2008. Processing at our small dairy at Pensilva in Cornwall ceased as planned in June, although distribution continues to operate from this site.
We expressed concern at the time of our Preliminary Announcement in May about rising oil and packaging costs, and explained that increases in our selling prices were being implemented to recover these costs.
Diesel and HDPE costs have continued to rise since our Preliminary Announcement in May and this is being compounded by substantial increases in electricity and gas costs. It is clear there will be a need for the Company to seek an increase in our selling prices from customers to recover the cost increases we are incurring.
In May we also highlighted that bulk cream revenues were a major cause for concern as they had dropped substantially since peaking in Autumn 2007. However, some recovery in bulk cream prices has taken place in May and June, and we are optimistic this can be maintained in the period ahead.
Whilst costs have continued to increase in recent months, we remain confident that given the improving cream revenues and anticipated cost recovery from customers, we will deliver results for the year in line with expectations.
In summing up, I can say that the last few months have been amongst the most difficult we have ever faced as a business. However, we are confident that with a robust balance sheet, the most modern and efficient network of dairies and distribution centres in the UK, and the support of our customers, we can rebuild margins back to acceptable levels."