The company’s performance over the recent period of severe winter weather throughout Great Britain has drawn positive feedback from across its customer base. The commitment shown by staff was exceptional and, despite major disruption to Britain’s road network, RWD successfully fulfilled increased demand from customers.
The previously announced increase in volumes supplied to Tesco commenced successfully in early December 2010, and volumes with other customers were maintained through the period.
The completion of the third and final phase of capacity at Bridgwater was beneficial in meeting customer requirements through the difficult weather conditions. Utilisation of the additional capacity resulted in throughput peaking in recent weeks, on an annualised basis, in excess of 450m litres and allowed an easing in volumes processed at other dairies, as well as a reduction in the level of overtime worked.
Bulk cream prices have been stable in recent weeks, with average cream revenues for the year remaining higher than last year. As previously reported, these additional revenues have been absorbed by increased costs, an increase in the amount paid for raw milk supplies and margin pressures in an intensely competitive market.
The statement continues:
In relation to raw milk, we recognise the difficulties faced by suppliers who have experienced increased costs in recent months. We note calls from milk suppliers for an increase in the amount paid for raw milk and continue to seek to address this concern, as well as manage our own costs and margins.
We have this month commenced work on the expansion of our milk reload depot at Market Drayton. Once complete, this will assist with the expansion of the Wiseman Milk Group and in meeting our target of having 70% of our milk sourced from our directly contracted farmers.
We remain focused on improving margins and look to reduce costs across the business. We have progressed work on a number of initiatives and continue to look to achieve cost savings over each area of controllable costs.
The recent rises in oil related costs are significant. Current costs for diesel and High Density Polyethylene (used in plastic bottles) are 10% higher than those incurred in September 2010. We continue to undertake initiatives to reduce our utilisation of these materials, but in the absence of any compensatory factors, such increases, if sustained, have the potential to materially impact costs going forward.
Our cash flows continue to be positive and we believe that we can maintain our net debt at its previously reported level and still fulfil our capital expenditure plans for the year.
Source: Robert Wiseman Dairies
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