Robert Wiseman Dairies raised the spectre of higher milk prices yesterday as it warned it would have to pass on the rising costs of fuel and packaging.
The company, which supplies milk to supermarkets including Tesco and Sainsbury's, is facing soaring bills for diesel, gas, electricity and milk cartons. Its chairman, Alan Wiseman, said: "It is clear there will be a need for the company to seek an increase in our selling price from customers to recover the cost increases we are incurring."
If supermarkets do decide to pass on higher prices to shoppers, they are likely to arrive after the dairy industry's round of price negotiations in the autumn.
Andrew Saunders, an analyst with Panmure Gordon, said: "The company remains focused on achieving price rises with customers and we believe these will come in due course."
Mr Wiseman said factors such as the substantial increases in electricity, gas and oil costs had made the past few months "among the most difficult we have ever faced as a business".
However, he said the Glasgow-based company was confident it could "rebuild margins back to acceptable levels", and pointed out that its sales volumes for the first quarter were 2 per cent higher than over the same period last year. The company expects to deliver full-year results in line with forecasts.
Clive Black, an analyst at Shore Capital, said: "We expect the rate of volume growth to accelerate through the year to a run-rate of about 3 per cent to 4 per cent, with total revenues higher again as a result of inflation."
Mr Wiseman said his company had regained its contract to supply 131 Netto discount supermarkets, and last month began delivering milk to Martin McColl convenience stores.
Mr Wiseman also said he was optimistic about a recovery in the price of bulk cream for May and June, following a substantial drop since the autumn.