Alan Wiseman, in his swansong as head of Robert Wiseman Dairies, highlighted "intense competition" in parts of the UK milk market as he forecast a sales slowdown.

Mr Wiseman, stepping down as chairman after 38 years, said that the UK group would not maintain for the rest of its financial year, which started in April, the growth of 11.6% in volumes it had achieved so far.

While sales would get a boost in August, when the company starts delivery of an additional 30m litres of milk a year to Co-operative supermarkets, comparisons were becoming more difficult with last year, when Robert Wiseman received a one-off boost from the collapse of rival Dairy Farmers of Britain.

"Sales volumes have benefited from consolidation in our sector," Mr Wiseman told the group's shareholder meeting.

Margin pressures 

Furthermore, the company faced "intense" competition in the middle market, in the main convenience stores, where its focus was on defending its existing trade, which accounts for some 30-35% of group sales volumes.

"The company will continue to look to preserve its market share in this area," Mr Wiseman said.

He added that the group was also facing higher pressure from higher plastic and fuel costs, which were raising packaging and distribution bills.

"The recovery of these additional costs, and the objective to rebuild our underlying operating margins, remains of primary importance," Mr Wiseman said.

City reaction 

The statement received a mixed welcome in the City, where Brewin Dolphin analysts cut their rating on Robert Wiseman shares to "add" from "buy", while KBC Peel Hunt analyst Charles Hall kept a "hold" recommendation and a 500p price target.

"A 'satisfactory' first quarter still leaves the prospects for the rest of the year subject to management's level of success in pushing through price increases to recover higher material costs," Mr Hall said.

At Panmure Gordon, Damian McNeela also left his rating on Robert Wiseman stock at "hold", with a 520p target.

"Higher bulk cream prices have offset higher plastic and fuel costs ensuring a satisfactory financial performance," he said.

The shares closed 1.7% higher at 513.5p in London.