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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Robert Wiseman | RWD | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
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|---|---|---|---|---|
| 0.00 | 0.00% | 389.75 | 00:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 389.75 |
| Top Posts |
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Posted at 14/1/2012 12:36 by jab118 High there fellow investors/ traders Anyone enlighten me on the price rise over the last few days have many shares in my porfolio but have been staying in the hills of a small Greek Island since May ( (sold in May andd went away) but not enougth however I'm still here and need a summary of this share over the last months .. jab is back thankyou ladies & gentlemen |
Posted at 13/1/2012 13:46 by jacks13 The Wiseman family have a large stake in this, they're unlikely to want to let it go cheaply. They are as aware as anyone that the approach is opportunistic but the outcome will depend I suppose, as ever, on the attitude of the institutional investors.Competition issues notwithstanding are there any other likely bidders? |
Posted at 26/7/2011 12:47 by masurenguy Stuck between a rock and a hard place: Robert Wiseman DariesIntroduction Robert Wiseman procures, processes and distributes milk in the UK. It claims to supply 1/3rd of milk consumed in the UK, can supply milk to 100% of postcodes in Great Britain and holds a market share of roughly 40%. The share price took a 30% hit back in September 2010 and hasn't really recovered since. RWD has been already been looked at by Cautious Bull, UK Value Investor and Mark Carter. As with most value situations the reasons are quite legitimate as the company has seen its margins come under severe pressure. The reasons for this are probably quite involved so we will leave this discussion till later. What is worth mentioning at this stage is that since 1996 the company has grown revenue in every year. Any problems have always expressed themselves through margins and, more specifically, within the cost of goods line. Indeed, since 1996 revenue CAGR has been 12.9% but COGS CAGR has been 13.3% but this trend of faster COGS growth only emerged after 2008. As value investors, we have to pick carefully through lots of companies separating those that are fundamentally broken from those that are experiencing some cyclical trouble . With RWD, the situation may or may not be cyclical but it is certainly the most threatening period since the company's flotation in 1994. What this means for valuing the company is that we have to take quite pragmatic fashion. Historical statements are relevant but we will have to take a closer look at industry factors. Often this is difficult but we have a wide range of useful data available on the internet and Parliamentary inquires by DEFRA give us some insights into what people in the industry are thinking about. Operating Metrics From the above tables, we can see that, apart from a blip in 2009, the past five years have been tremendously good for RWD. What we notice is that the company relies on turning its operating assets over lots of times on very thin margins. In terms of operating assets, we see that the company has increased assets by £20m in the past five years but revenues have grown by some £300m. What is interesting is that we would expect the processing part of RWD's business to be fairly capital intensive, it involves machines and factories after all, so we would expect operating assets to trace movements in revenues fairly closely. What we find looking at the historical PPE turns is that this has broadly happened as revenue per dollar of PPE has grown from around £2.50 in 2001 to nearly £4 in 2011. However, this trend has slowed significantly in the past five years. Instead, the improvement in net operating asset utilization has come from its growing creditor balances. If revenue growth resumes there will probably quite a large improvement in NOA turns. Looking to margins, we can see that these have slid slightly in the last year. The competitive position of RWD is quite complicated as it stands between the retailer and producer. As we can see though, the most important trend has been that big increase in COGS since 2007. The most important of these recent trends are the increasing prices of raw materials such as fuel and resin used in packaging, a price war by retailers and rising operating costs for farmers. The competitive dynamics are slightly more complex than this but this is the basic outline of the situation. We also see that the company has worked on taking S&D costs out of the business and these are now at all time lows although this has had very little impact compared to the move in COGS. The company is also committed to being environmental sustainable. Usually, I am fairly skeptical of these programs as they seem to have little effect on the underlying business. For RWD, this appears to be quite different as the environmental program seems to be focused on taking significant costs out of the business. Financial Condition From the second table, we can see that net debt has fallen to around £5m and the EBIT/Interest expense multiple is at 35x, well above the three year average of 29x. I think reducing this was probably a pretty good use of cash as having a lot of debt while the industry goes through a potentially difficult period isn't too helpful. The dividend has also been pretty generous in the past five years. I think this is perhaps slightly less fortunate as some of this cash may be needed to invest in margins if pricing continues to be difficult. Recent Trends/Competitive Position On first glance, the industry seems quite simple. RWD buys the milk from farmers, the milk is processed, it is sold to supermarkets. However, the industry is slightly more complicated than that. First, I will discuss what how the industry structured, what this means for the competitive positions of the groups involved and, particularly, for the processors. I will follow this with discussing some of the more recent trends in the industry and then ask how RWD fits into these trends. The most important factor in defining industry structure is probably the use of "direct supply" contracts. These are contracts between a producer and either a processor or a processor/retailer duo. The contract locks a producer into receiving a certain price for milk over a fixed period of time (usually 12 months but RWD offers 3 months). These contracts make up the majority of supply for processors however, some milk is supplied by the three producer co-operatives: First Milk, Milk Link and United Dairy Farmers. The prevalence of "direct supply" contracts obviously introduces a significant amount of rigidity in the industry. Farmers will be stuck with a price for a certain length of time while they could be facing volatile raw material costs. For processors and retailers the situation is slightly more favorable. Processors gain some certainty about margins and capacity however, they still face rising raw materials (fuel and resin) and are vulnerable to pressure from retailers. Retailers began making these contracts directly with farmers in 2004 to secure their supplies for milk. Retailers usually have to pay a premium of around a penny on each litre to secure these contracts. Out of all groups, they probably have the most to gain. One exception to this trend though appears to be Tesco's Sustainable Dairy Group who pay prices that move with changes in the farmer's cost of production. My rough look at the industry suggests that most farmers have direct supply contracts with processors. So the main effect of these arrangements is that we get pretty volatile margins for most of the participants. Recently, farmers have come under pressure with the rising price of raw materials (cows, feed, fuel and fertilizer) and it seems to be consensus that farmers are currently selling below their cost of production. The EU Commission recently proposed changes to the system of contracts to try to ease the pressure on farmers and DEFRA is currently collecting evidence from the main industry bodies about these proposals. So processors stand in the middle of this trying to make money from the spread between farmgate and retail prices. This can be extremely challenging as the factors determining these two prices are often completely different. In the first table, we see the farmgate, processing and retail prices since 2005. The gross margin for processors has stayed quite constant over the period moving from 30ppl to around 40ppl in April 2010. What is more noticeable is the increase in retailer gross margin from 40ppl to 60ppl towards the end of the period. Interestingly, the margins continued to increase after the supermarkets/process The trends in production and consumption are somewhat harder to come by. From my reading about the industry, it appears that production over the past five years or so hasn't been too good however, there has been some recovery at the start of this year. The data would suggest the same, production through the start of the year has been up quite a bit from production in the previous two. However, I am not too sure about the interpretation of some of the data. Consumption is also quite tricky. DEFRA publishes consumption based on per person per week however, the raw data isn't included. DEFRA's figures show that consumption of milk per person per week has been declining slowly for quite a while. We see that retailers cut the price of milk massively in mid-late 2010 and farmgate prices have slowly crept up with the large increases in the cost of production. When discounting, retailers often focus on the everyday items to draw custom in and this appears to be what has happened here. As mentioned earlier, the pressures on farmers have been through, substantially, all the raw materials they use in production. For processors, this means a far slimmer margin as they buy at a higher price and sell at a lower one. It wouldn't be surprising, looking at the above table, that margins had slimmed to around 15ppl which is far lower than any data I have going back to 1999. Focusing on RWD and its position in the industry we can see from the table above that its probably the industry leader with around 40% of the share of volume amongst major retailers. At the DEFRA inquiry, RWD stated that its market share of the liquid milk market was around 31%. As mentioned already, RWD is suffering from the increase in resin and fuel costs. The company also highlights the fairly flat bulk cream prices. Whilst Arla and Dairy Crest utilize the "leftovers" of the milk processing operations to make butter and cheese, RWD sells most of it on (it does produce small amounts of cream). Interestingly, MP Neil Parish questioned this strategy in the DEFRA inquiry asking if the company had any plans to extend beyond liquid milk and the company representatives affirmed the strategy of sticking with processing liquid milk. Another factor the company highlights is the prices it offers farmers. The company offers the shortest resignation period and highlights the low levels of actual resignations. In the written evidence to the DEFRA committee it uses a fourteen year average of farmgate prices to compare itself to other companies which is perhaps slightly misleading as the market dynamics have changed considerably since then. Dairyco published a league table of all farmgate prices under aligned (i.e with a supermarket which offer the premiums) and standard contracts. These tables suggest a slightly less favorable picture (and compared to slide 12 in the recent trading update) with its standard price being under Arla by 0.02ppl and 1ppl or so below smaller operations like Wyke. Its aligned contracts are certainly competitive but the Tesco Sustainable Dairy Group contract leads at 29.72ppl. The company argued at the DEFRA inquiry that basing contract price on farmer's cost of production (as in TSDG contracts) wasn't realistic as the prices for each industry participant was determined by different factors. Whilst this certainly is true for farmgate and retail prices it is less convincing for processors which are, to a certain extent, stuck with the spread. However, I think RWD's claim that they run their business on a mutual trust with farmers and that this works appears to be a legitimate claim. My view of RWD's position is that it has built its relationship carefully with farmers, it has concentrated on what it does best and I think that although the current times appear difficult the company seems to have an effective strategy to maintain its position. It has certainly shown good faith by investing in margins over the last few years and this should build up some goodwill with its customers and suppliers. The most important recent event though has been the decision of supermarkets to price more competitively and if this continues it may make RWD's position difficult as it doesn't have much of a fallback strategy and supermarkets have been aggressive in securing supply. Valuation The two tables above show RWD's historical valuation and we see that RWD is pretty much right at the bottom of the range since 2004 (the blue broken line is the current valuation). This is a fairly good sign but can be explained by that fact that processor margins are probably at all time lows. Looking to my usual model, I am again going to have to over-ride it and input some more creative scenarios for the margin figures. Margins are going to be the focus of this analysis and I am going to assume in all cases revenue growth of 4% over the next five years, constant net debt and the same growth in net operating assets as the past five years. Whilst these figures probably aren't accurate, they are conservative which should be important in preventing any serious errors. Base Case Margins fall to 1.5% and add 25bps every year over the next five years. Worst Case Margins fall to 1% and add 25 bps every year over the next five years. Best Case Margins fall to 1.5% and add 100bps for the next three years until they reach the high of 4% (the high of the past five years) and stay at 4% in the last year. Conclusion The milk industry is a tough and competitive industry to be involved in. However, it is interesting that most sides in the current Parliamentary inquiry still relished the competitive challenge and transparency in the industry at the moment (especially relative to the old Milk Marketing Boards). Processors are, at the moment, stuck between a rock and a hard place being pushed both by producers, who are probably selling slightly under cost (some suggest around 29ppl) and retailers, who have been engaged in something of a price war since the end of last year. However, these factors, although damaging, are cyclical. RWD is a concentrated operation that has built up enough market share and goodwill with its suppliers and customers to weather this period. It has focused on taking fixed costs out of the business meaning if COGS improves margins will spring back quickly, it has worked to push its creditors meaning NOA turns will spring if revenue growth improves only slightly and it has reduced debt. The latest price figures suggest that RWD is probably still getting squeezed which means caution should still be exercised but pressure may ease up with the seasonal trends in consumption later on in the year. This positive view is obviously interesting considering that RWD is undervalued, at most, in the base case scenario by around 15%. However, what I see going forward is fairly limited downside and a significant upside if things improve slightly. At this stage, risk has to be limited as the situation with margins still is uncertain but the potential for good gains is definitely present. |
Posted at 03/6/2011 08:18 by masurenguy Recent broker views !In the spotlight: Liquid milk proves sour spot for UK dairies Two of the UK's largest dairy companies - Robert Wiseman Dairies and Dairy Crest - delivered their annual results this week and a comparison between the two makes for some interesting reading. Robert Wiseman reported a near 30% plunge in profits as its liquid milk business was hit by poor trading conditions, while Dairy Crest showed the benefits of being a broad-based dairy firm, delivering a 5% increase in profits. Katy Humphries takes a closer look. Shares in Robert Wiseman Dairies took a not-unexpected hit this week, falling from an opening price on Monday (16 May) of 325p (US$5.27) to an opening price on Friday of 320p as investors reacted unfavourably to the news that profits at the group had dropped by 24% in the 12 months to 2 April. Robert Wiseman is one of the UK's premier milk suppliers. The company primarily supplies private-label milk to supermarkets as well as milk under its own brand. Currently, Robert Wiseman accounts for over 30% of the fresh milk consumed in the UK market. While the group is a powerhouse in UK liquid milk, its distinct focus has left it subject to the swings of overall trading conditions in the sector, placing profitability under considerable pressure over the last fiscal year. Profits at the company plunged despite a 3.5% increase in turnover, Wiseman revealed on Tuesday. Wiseman has found itself squeezed from both sides. On the one hand, rising input costs are forcing up the cost of goods sold, while on the other, the competitive market is making it tough to pass costs down the supply chain. Over the past 12 months, input costs have been driven up by higher fuel, oil and milk prices. Oil-related costs rose 20% year-on-year in fiscal 2010-11 while diesel costs rose by 13% in the same period. Meanwhile, the price that Wiseman pays its suppliers for raw milk increased to 26.72p per litre in this month, versus 24.32p per litre in May 2010. However, according to Julie Macleod, senior analyst with industry group DairyCo, the cost for farmers to make milk currently stands at around 27-29p per litre. And, despite Wiseman upping the price it pays its farmers, McLeod indicates that the cost pressure on processors could continue to rise. "Fuel, fertiliser and feed costs have all increased double-fold since last year, and these costs account for more than 50% of dairy farmers costs," Macleod tells just-food. "The knock-on effect is that some producers are going out of the industry, raising a concern over continuity of supply. Processors must offer competitive conditions to secure supply." On the demand side, the story is a familiar one - while Wiseman was able to grow revenues by increasing volumes, its value sales suffered. Milk is often used as loss-leader by Wiseman's key customers - supermarkets - meaning that the company has to an extent been caught in the crossfire of the intense retailer competition the UK has witnessed over the past year. This trend can be noted in the wider UK liquid milk category. According to data from DairyCo, during the 52-weeks ended 17 April, total milk sales volumes increased by 2.2% year-on-year while total sales by value fell by 4.7%. "The multiples and middle market are pressuring to bring the price down, with processors sitting in the middle," Macleod suggests. "You have this predominance of retailers who are setting a price that makes it difficult for processors and farmers to operate profitably." The result is that margins at Wiseman took a considerable hit in the last fiscal year. Operating profit fell by nearly 30% and the group's return on sales fell by a considerable 180 basis points to 3.9% during the period. And, according to Shore Capital analyst Clive Black, things do not look set to get better for Wiseman in the coming year. "Continued input price pressure, both from oil-related and farm based costs, leads us to downgrade our expectations once again for Wiseman's financial out-turn for fiscal 2011-12," Black says. In contrast, fellow UK dairy major Dairy Crest this week demonstrated the benefits of being a broad-based dairy business, as it was able to offset rising costs and a weakness in liquid milk with a strong performance from its cheese and spreads units. Dairy Crest's liquid milk business saw annual operating profit tumble 22% in the year amid higher costs and heightened competition. "A very competitive market has put pressure on this side of the business," CEO Mark Allen said. While sales at the unit increased 1%, like Wiseman, gains were driven by higher volumes to the UK's retail multiples - which were up 9%. In a bid to improve fluid milk profitability, the company said that it had increased its focus on the UK's supermarkets, while reducing sales to so-called "middle ground" customers, such as food service groups and smaller retailers. "Although some parts of the middle ground remain attractive, others have become increasingly commoditised and prices and margins have been adversely affected," the group said. Like Robert Wiseman, Dairy Crest said that it also came under increasing pressure from higher farm-gate prices, with milk costs up by £40m a year. Other input costs also put a strain on margins, with spending on fuel, packaging and oil up by £25m. While the company's ability to push price increases through to its customers is constricted due to broader industry dynamics, Dairy Crest has made good progress in mitigating some of the higher costs through its efficiency drive. In its trading update, the company said that it delivered savings ahead of its £20m target last year and committed to achieving another £20m in cost savings in the year to March 2012. In spite of the difficult trading conditions faced by the company's dairies division, Dairy Crest was still able book a 5% increase in overall profits. According to Investec Securities analyst Nicola Mallard, the divisional split was "as expected", with "good progress" in Dairy Crest's foods unit offset by a reduced result from its dairies arm. Higher group profits were primarily achieved on the back of a 65% jump in operating profit at its cheese business, which overtook profits at its dairy unit for the first time. The company has invested heavily behind its brands and this paid off in cheese, where Cathedral City booked a sales gain of 6%, ahead of the 2% growth seen in the UK cheese market. The outlook for the UK fluid milk category for the coming 12 months remains bleak, with little likelihood that either Robert Wiseman or Dairy Crest will benefit from a significant improvement in conditions. Nevertheless, Dairy Crest's ability to offset tough trading in this sector through its other units, its focus on investing behind its key brands and plans to strip costs out of the business leave it well-placed to continue to deliver profitable growth in the year to come. |
Posted at 30/12/2010 17:00 by timbo003 MasurenguyAgreed, Wiseman has incredibly low gearing, although some investors (like myself) might think it a bit too low, as a bit of borrowing is tax efficient and also a geared balance sheet is generally a good thing if inflation is picking up (which it appears to be doing). According to the last RWD annual report (page 9)... ....milk volumes were roughly equal for the big three, i.e. Wiseman, Dairy Crest and Arla. So I'm not entirely sure what you mean when you say that they have "more capacity than anyone else". Another minus in the DCG vs RWD equation (from my point of view), is that there is probably a zero chance of a takeover of Wiseman, the family hold far too many shares, whereas this is certainly not the case for Dairy Crest, where Muller have just declared a notifiable interest. Whatever, having said all that, Wiseman are definitely on my short list of new shares for my ISA, I have £4.5K divis coming into the ISA in January, so I may well take a maiden stake towards the end of Jan assuming nothing fundementally changes between now and then. |
Posted at 17/11/2010 07:46 by masurenguy Robert Wiseman Dairies - Our view: hold for nowThe mood of investors towards Robert Wiseman Dairies soured markedly in September when it issued a nasty profits warning and pinned the blame on yet another price war between the supermarkets and in the independent grocery sector. Yesterday, the milk producer, which counts Tesco, Sainsbury's and the Co-operative Group among its customers, reiterated that it faced a "period of intense competition" which will inevitably squeeze margins as it churned out a 2.7% fall in pre-tax profits to £21m for the six months to 2 October. The company, based in East Kilbride, also confirmed its September guidance that this competition would hit its second-half profits by £7m and, assuming no improvement in margins or volume gains, by about £16m in the financial year to March 2012. All of this leaves a taste like a bad pint of Wiseman's product on a hot day. But despite this, the company, which supplies just under a third of Britain's milk, said it was committed to maintaining its existing volumes, suggesting that it is prepared to stand shoulder-to-shoulder with its rivals Dairy Crest and Arla on price. This was demonstrated by Wiseman's turnover, which increased by 6.8%to £452.8m over the half year, driven by sales volumes which were 8 per cent higher. In fact, Wiseman said it had agreed to supply Tesco with an additional 35 million litres of milk a year, which helped to move its shares up yesterday. So there is scope for volume gains to freshen performance. Wiseman provided investors with some further cream by maintaining its interim dividend at 5.75p a share and cutting its net debt to £21.5m from £26.7m. To mitigate the impact of the price war on its margins, Wiseman is pushing ahead with a programme aimed at reducing costs and boosting the efficiency of the business. Wiseman's shares trade on a rather modest multiple of 8.8 times 2011 forecast earnings, with the stock near a 12-month low after a recent battering. Life is not going to get much easier for the company anytime soon but with the shares so depressed we wouldn't be bailing out just yet. Whatever the general economic climate, people are unlikely to stop buying milk. So, on balance, there is a case for keeping hold of the shares for the moment. |
Posted at 17/11/2010 04:40 by spob Robert Wiseman story turns sourCreated:16 November 2010Written by:John Hughman Robert Wiseman saw its shares take a beating in September, as the story turned decidedly sour when it warned investors that profits this year and next would be substantially below expectations as a result of intense competition in the liquid milk industry. The warning was, it seems, the result of a price war raging between large supermarket customers, which saw the price of a four-pint carton fall from 153p to 125p, thus structurally lowering industry margins. Wiseman said that second-half operating profits would be £7m lower than forecast, but the pressure seems to have taken a chunk out of first-half operating profits, too, which fell 2.7 per cent to £21m even though volumes climbed 8 per cent. Although Wiseman was able to report an additional 35m litre per annum contract with Tesco, analysts are now worried that the group will struggle to generate adequate returns from its new 500m litre Bridgwater dairy, which it completed in the period. There are also concerns that Wiseman's plans to offset margin pressure through cost reductions could prove challenging, especially if there is any reduction in the current high bulk cream price. Broker Evolution Securities expects pre-tax profits of £36m and EPS of 36.1p in the year to March 2011, falling to £29m and EPS of 29.1p the following year (from £47m and 46p last year). ROBERT WISEMAN DAIRIES (RWD) ORD PRICE: 326p MARKET VALUE: £230m TOUCH: 325-327p 12-MONTH HIGH: 536p LOW: 311p DIVIDEND YIELD: 5.5% PE RATIO: 6 NET ASSET VALUE: 219p NET DEBT: 14% Half-year to 2 Oct Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p) 2009 424 21.0 20.8 5.75 2010 453 20.2 21.8 5.75 % change +7 -3 +5 - Ex-div:29 Dec Payment:03 Feb IC VIEW:FairlyPriced Robert Wiseman's share price plunge leaves it lowly rated and offering a chunky yield - but volume growth will slow in the second half alongside input cost inflation, and the shares are fairly priced. |
Posted at 16/11/2010 09:26 by salpara111 I tend to view stocks on a 6-12 month hold so not a trader but not a long term investor.Currently I hold IRV which has a well covered divi at 9% and opportunity for 50% share price upside so I will keep my money there at present. IRV is interesting in that it is in a sector that analysts love to hate at present, hence the very low rating, but has remained strongly profitable through the cycle. RWD is a pretty safe punt at present but I suspect that it may take some time for it to turn and the divi is not that spectacular and may well have to be cut next year if the trading environment does not improve. |
Posted at 15/11/2010 14:41 by jab118 hope your right there phil ;-)maintained divi in Feb, so looks like good value just need some investors that's all....;-) As falling from this price, I say if it was going to happen it would of been today and I would have been very happy in averaging down ...;_) |
Posted at 14/11/2010 18:19 by jab118 Just asking guy, I like to know if anyones short or investing that's all, exactly the same as you, bought in on the last retrace for the first time. However, I think the mm's might mark it down again tomorrow with any further negativaty in their year end results. Which could give the share a healthy future IMO., as it would more than likely draw attention to new investors. |
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