Wiseman upbeat after £9.5m profit

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The Independent Online

Robert Wiseman Dairies, the Scottish milk producer being investigated for alleged market abuses by the Competition Commission, yesterday said its business recovery plan was well on track after spiralling costs hit margins in the previous half.

Robert Wiseman Dairies, the Scottish milk producer being investigated for alleged market abuses by the Competition Commission, yesterday said its business recovery plan was well on track after spiralling costs hit margins in the previous half.

For the six months to 30 September the group reported pre-tax profits of £9.5m, down 7 per cent on the half a year ago. But compared with 1999's second half, operating profits improved 25.9 per cent, with operating margins up 26.9 per cent.

Billy Keane, finance director, said the group's earlier problems had been caused by rising oil and packaging costs. He said the group had managed to offset this by negotiating better price deals with the supermarkets it supplies, such as Tesco and Asda.

David Hallam, an analyst at Williams De Broe, said: "You have what at the moment looks like a business which has been stabilised. But on the other hand, there are areas of uncertainty on the horizon."

One is the potential implications of the Competition Commission's report into Wiseman's monopoly position in Scotland, where it controls an estimated 85 per cent of the distribution market. The Secretary of State for Trade and Industry is considering the commission's unpublished findings and is expected to announce the outcome next month.

In June, the Commission set out possible remedies in the hypothetical event Wiseman was found to be operating against the public interest. These included enforced divestment in Scotland, the introduction of controls to prevent differential pricing, and a ban on further acquisitions of UK processing plants.

Responding to expectations that disadvantaged dairy farmers are likely to sue for damages under the new Competition Act if Wiseman is found guilty of alleged market abuses, Mr Keane said: "Our lawyers have advised us that the only potential penalties we face are remedies, as the Competition Act was introduced after our case was referred to the Competition Commission."

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