Robert Wiseman Dairies has vowed to go on investing in and increasing volumes on the back of solid results this week, despite a tough outlook for the sector.

Turnover rose 17.4% to £848m for the 53 weeks to 4 April, with operating profit up 11% to £35m and volume sales up 6.9% to 1.62 billion litres, the milk producer reported.

However, when taking into account non-recurring charges such as an OFT penalty and re-organisational costs accrued the previous year, operating profits actually fell by 8.6%.

The company nevertheless planned to increase volume further, said Wiseman. The dairy opened its new Bridgwater factory in September, and despite losing 40 million litres of milk supply to Tesco, it has picked up an extra 116 million litres from The Co-operative Group in a deal starting in August.

Robert Wiseman is currently using 98% of Bridgwater's 245 million-litre capacity and has begun work on a £7.5m project to increase capacity to 375 million litres. To meet the increased distribution capacity it also started constructing a £9.7m depot at Amesbury, Wiltshire, which will be operational later this year .

Milk margin pressure led to operating profit falling from 2.53ppl a year ago to 2.17ppl now. The drop was blamed on higher costs, delayed implementation of selling price increases and the decline in bulk cream returns.

Given the volatility of HDPE resin, oil costs and bulk cream revenues in the first half, the results were "satisfactory", said chairman Alan Wiseman. "We have been successful in rebuilding margins in the second half to provide a solid base for our business going forward."

Cost and competitive pressure would continue throughout 2009, Wiseman added, meaning operating margin pence per litre would be similar to those announced this week.

Margins would be improved in the medium term, as a result of strong cashflow and efficient facilities.