Dean Foods increases guidance, outlines strategy
February 26, 2009
by Keith Nunes
DALLAS — Dean Foods Co. increased its first-quarter 2009 guidance to at least 41c per share from 38c per share, and also increased its full-year guidance 19%, from $1.30 per share posted in 2008 to $1.55 per share.
"As we discussed a few weeks ago in our fourth-quarter earnings release, we expected the first quarter to be strong as the commodity environment continues to improve," said Jack Callahan, chief financial officer. "Most notably, the Class I mover milk price will decline in March to $9.43 per cwt, which is the lowest price in recent memory. The energy complex also remains favorable.
"Based on our analysis of the January results and what looks to be, based on preliminary reports, a solid February, the quarter will likely be even stronger than we initially thought."
The company also outlined a three-part strategy to continue to drive results over the next three years to five years. The first part of the effort focuses on reducing costs throughout its business. The company has piloted several systems to measure production and drive savings, and plans to roll-out the program company-wide. The company is targeting $300 million in costs savings from the program.
The other two components of its strategic plan focus on driving revenue growth by building on its manufacturing and distribution strengths to increase market share. The company also committed to investing in new capabilities and platforms to drive sustainable growth long term as the third part of its strategy.
"Dean remains a well-positioned leader in numerous attractive categories," said Gregg Engles, chairman and chief executive officer. "We possess multiple paths to drive growth, including executing against our cost productivity initiatives, driving revenue and profitability in our core businesses and the opportunity to invest in new platforms for future growth. Our leadership team plans to deliver against our fullest potential with a clear path to achieve our near and intermediate term objectives, all of which should combine to generate a sustainable, top-tier earnings progression over time."