DALLAS — Net income at Dean Foods Co. fell 42% to $131,353,000, equal to $1.01 per share on the common stock, in the fiscal year ended Dec. 31, down from $225,414,000, or $1.68 per share, in fiscal 2006. The company said its most recent results were bogged down by reorganization expenses and higher dairy product costs.
Sales in fiscal 2007 were $11,821,903,000, up 17% from $10,098,555,000 during fiscal 2006.
Dean Foods was particularly challenged during the fourth quarter, as income plunged 55% to $32,635,000, or 25c per share, from $72,962,000, or 55c per share, in the same period a year ago. Net sales in the quarter improved, though, rising 25% to $3,231,713,000.
"2007 was the most challenging year in the history of Dean," said Gregg Engles, chairman and chief executive officer. "We were faced with steeply rising and record high dairy commodity costs in our Dairy Group operations. At the same time, WhiteWave Foods was challenged by a severe oversupply of organic milk that drove down realized prices and increased competitive intensity in the industry.
"However, while 2007 was a difficult year operationally, these near-term challenges did not slow our progress toward transforming the company into a stronger long-term competitor."
During the full year, the Dairy Group posted operating income of $624,510,000, down 9% from $684,659,000. Sales in the segment were $10,449,378,000, up 18% from $8,841,839,000. For the fourth quarter, operating income eased 13% to $150,886,000 despite a 26% improvement in sales. The company attributed higher sales to the pass-through of higher overall dairy commodity costs to consumers.
In the WhiteWave Foods segment, operating income in fiscal 2007 was $118,404,000 down 11% from $132,704,000. Sales were $1,372,525,000, up 9% from $1,256,716,000 during fiscal 2006. For the fourth quarter, operating income eased 20% to $36,618,000, while sales climbed 13% to $388,423,000. The company attributed higher fourth-quarter and yearly revenue to strong sales growth across its branded portfolio, with net sales of Horizon Organic milk increasing more than 18% for the year.
Citing "highly volatile and uncertain markets," Mr. Engles said Dean Foods would provide a wider guidance range for quarterly guidance, and limited guidance for the full year. He said the company expects earnings per share for the first quarter of fiscal 2008 to be between 15c and 20c per share, with full year e.p.s. projected to be at least $1.20 per share.