The Investment Column: Robert Wiseman

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ROBERT WISEMAN Dairies is the dark horse of the dairy sector. Smaller than rivals such as Unigate and Express Dairies, it is an aggressive operator that has developed strong market positions. From its base in Scotland it controls more than 80 per cent of the milk market north of the border. It has no exposure to the declining doorstep delivery market.

While Tesco and Asda are putting the squeeze on dairy company margins, Wiseman largely supplies convenience stores, which have less bargaining power than the major multiples.

Even so, the shares have tumbled this year as the market has punished the entire food sector.

Wiseman's half-year profits flattered to deceive somewhat yesterday. Pre-tax profits rose 12 per cent to pounds 9m, but this was helped by a pounds 1m fall in the depreciation charge.

The main news was that Wiseman has received planning permission for a new pounds 30m dairy near Birmingham, which will increase the group's push further south. The new dairy is due to open in spring 2001, worsening the over- capacity in the sector. There have been new contract wins and sales volumes are up by 25 per cent. The second half should also benefit from lower input prices, though these may be gobbled up by the supermarkets.

Much depends on where Wiseman will fit in the big milk shake-up that seems certain to happen in the next 12 months. On a full-year profits forecast of pounds 22.5m, the shares - up 4.5p at 173.5p yesterday - trade on a forward multiple of 9. This is in line with the depressed sector, but not worth chasing.

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