Tags: Dean | Foods | Forecast | Profit

Dean Foods Forecasts Profit as Costs Fall

Monday, 10 Nov 2014 05:12 PM

Dean Foods Co., the largest U.S. milk processor, forecast its first quarterly adjusted profit in a year, due to cost cuts and a steep fall in butterfat prices.

The company, whose shares rose 14 percent Monday to a three month high, also reported a smaller-than-expected adjusted loss for the third quarter.

This was the first time in seven quarters that the maker of Meadow Gold and Dean's Milk beat average analyst estimate on the bottomline.

Dean Foods said it expected a decline in production and distribution costs as a result of 12 plant closures and other cost-cutting measures.

"We don't expect much relief on raw milk costs until early 2015, but we do expect significant butterfat cost declines at the end of the fourth quarter," Chief Executive Gregg Tanner said in a statement on Monday.

The company has been blaming volatile milk prices and higher costs for butterfat, a key ingredient in products such as ice creams and cottage cheese.

"The company's cost reduction efforts are finally starting to show up in results," Key Banc Capital Markets analyst Akshay Jagdale wrote in a note.

The Dallas-based company has been trying to lower costs by closing factories and cutting jobs. Dean Foods withdrew its full-year profit forecast in August, after cutting it in May.

"People have been waiting for the cycle to turn, for the environment to improve for a while now... things are looking a lot closer to improvement in the cycle," S&P Capital IQ analyst Joseph Agnese told Reuters.

The average cost of raw milk rose about 24 percent in the third quarter ended Sept. 30, dragging the company to its fourth straight loss, Dean Foods said.

Net loss attributable to the company was $16 million, or 17 cents per share, compared with a profit of $415.1 million, or $4.35 per share, a year earlier.

Excluding items, it lost 3 cents per share, much less than the average analyst estimate of 13 cents, according to Thomson Reuters I/B/E/S.

Net sales rose 8 percent to $2.37 billion and was slightly better than the average analyst estimate of $2.35 billion.

Dean Foods also forecast an adjusted profit of 5-15 cents per share for the fourth quarter ending December

The company's shares gained $1.98 to close at $16.40 after touching a high of $16.59 during the session.

The stock — Monday's top percentage gainer on the New York Stock Exchange — had fallen 16 percent this year up to Friday's close.

© 2017 Thomson/Reuters. All rights reserved.

 
1Like our page
2Share
Companies
Dean Foods Co., the largest U.S. milk processor, forecast its first quarterly adjusted profit in a year, due to cost cuts and a steep fall in butterfat prices.
Dean, Foods, Forecast, Profit
407
2014-12-10
Monday, 10 Nov 2014 05:12 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved