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Robert Wiseman Dairies has warned that it will have to increase the price of milk to recover rising plastic packaging, diesel and energy costs.

The Glasgow-based firm, which supplies Tesco, Sainsbury's and Somerfield, said the Platts HDPE resin index had risen by 10% since January to £1,000 per tonne and the price of derv was up by 20% since last summer.

The firm said in March it had started to implement higher prices to cover "unprecedented" pressure from rising costs.

However, it warned today (12 May) that the process had taken longer to conclude than anticipated and that the delay would have a £3m impact on profits in the first quarter of the current financial year.

Costs have continued to rise since negotiations with customers began, resulting in a further impact on operating profits of up to £2m.

The warning came as the firm announced operating profits of £38.4m in the year to 31 March, a rise of 10% on the previous year.

Sales volumes rose by 4% to 1.5 billion litres, as turnover increased by 19% to £722m.

The firm signed a 12-month extension to its milk supply with Somerfield during the year and from next month will also start supplying the supermarket with around seven million PPE pots per year for its cream requirements.

The firm also packs around 600,000 250ml Tetra Pak cartons a year for kids' organic flavoured milk for Sainsbury's.

Chairman Alan Wiseman said the results were "satisfactory" and, despite "short-term" margin pressures, he was confident that the business was in good shape with its new site in Bridgwater, Somerset, now operational.

However, he said full commissioning of the third and final filling line of phase one had been postponed by a month to late June, increasing the final cost to £80m.

The firm also estimated that it would face capital costs of £20m at Bridgwater to increase capacity from 250 to 500 million litres a year.

The firm's share price fell by 10.2% to £4.46 today.