Tags: Dean | Foods | reorganized | DF

Dean Foods Reorganized for 2012 Rebound

By    |   Wednesday, 22 February 2012 08:32 AM

Dean Foods (DF) reorganized its business last year in a move to control costs and generate more profits in its markets. The company hopes the changes lead to a rebound in profits in 2012. The 2011 fourth quarter was an indicator of that possibility.

Dean Foods is a processor and distributor of milk and milk-substitute products. After the 2011 fourth quarter reorganization, the company reports the results of three operating divisions: Fresh Dairy Direct is the delivery of fluid milk products, WhiteWave-Alpro provides dairy alternatives such as Land O' Lakes creamers, Silk soy products and organic raw milk, and the Morningstar division produces private label yogurt products.

Fresh Dairy Direct sales produce about three-quarters of company revenue and about 55 percent of operating income.

For 2011, Dean Foods reported total revenue of $13.1 billion, up from $12.1 billion in 2010. Gross profits after subtracting cost of sales was $3 billion, the same amount as a year earlier.

Adjusted net income for the year was 77 cents per share, down from 80 cents. The fourth quarter adjusted earnings of 27 cents exceeded the Wall Street consensus estimate of 23 cents per share and were well above the 15 cents earned in the fourth quarter of 2010.

Cost controls

Dean Foods set up the new divisions to obtain better control on raw milk and overhead costs in the competitive liquid milk business. The results were apparent in the 2011 fourth quarter, when fluid milk shipments were flat yet the division's operating income increased by 11 percent.

Growth potential is best from the coffee creamers and soy products from the WhiteWave-Alpro division. For 2012, Wall Street analysts are forecasting adjusted earnings of 89 cents per share, 16 percent higher than the 2011 results.

Of the 12 analysts who follow and rate Dean Foods, eight rate the stock a hold and the remaining four currently show a strong buy rating.

The company next reports on May 10.

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Wednesday, 22 February 2012 08:32 AM
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