Wiseman's says it is in good shape despite losing two contracts

Despite extending similar contracts with Sainsbury's and Tesco, the Scottish firm's pre-tax profits fell 15% to �24.7m, from �29.1m a year ago.

Milk sales were up 2% on last year, however, and Wiseman's said it was "confident" of restoring profit growth.

Wiseman's shares closed up 4.5p at 246 pence on anticipation of rising sales.

Contract changes

Wiseman has lost two significant contracts over the past year as supermarkets have renegotiated their milk supply arrangements.

Its contract with Asda came to an end in November while its agreement with Morrisons, worth �40m in sales, will end in October although this did not impact on last year's figures.

At the same time, Wiseman's has increased the amount of milk it provides to Tesco, Sainsbury's and Somerfield outlets.

We remain confident that the foundations are in place to allow for the restoration of the company's strong record of profitable growth Alan Wiseman, chairman Check Robert Wiseman Dairies' share price

The overall impact on sales volumes of the contract changes will be largely neutral, the company said.

However, a dip in sales and profits in the second half of the year between the end of the Asda contract and the start of its enhanced deal with Tesco dampened its profits for the year as a whole.

Turnover rose 3% to �489.2m in the 52 weeks to 2 April, but operating profit slumped 19% to �24.6m.

Greater stability

Wiseman's said investors could expect a period of greater stability now that all the UK's largest supermarkets had revised their milk supply arrangements.

"We continue to enjoy strong organic growth from our multiple retail customers who are still winning market share from declining doorstep sales," said chairman Alan Wiseman.

"We remain confident that the foundations are in place to allow for the restoration of the company's strong record of profitable growth."

The company is rejigging its management structure with Alan Wiseman becoming non-executive chairman and brother Robert - currently managing director - stepping up to chief executive.

Separately, rival dairy firm Dairy Crest is to shut down a processing plant in Birmingham and three distribution depots in Oxfordshire.

The firm is inheriting the four sites as part of its �20m acquisition of Midlands Co-operative Dairies.

Dairy Crest - the owner of St Ivel butter - said it hoped to offer alternative jobs to as many of the 393 workers as possible.