Dean Foods earnings rise on cost control measures

by Keith Nunes
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DALLAS — A focus on reining in costs led to improved earnings for Dean Foods Co. during the first quarter of fiscal 2012. For the quarter ended March 31, Dean Foods earned $37,883,000, equal to 21c per share on the common stock, up 62% from $23,382,000, or 14c per share, in the same period a year ago.
Sales during the quarter rose 5% to $3,214,094,000 from $3,049,854,000 during the previous year.

“Today we announced strong first-quarter results, driven by stronger-than-forecasted growth across each of our three operating segments, and supported by tight expense control across the business,” said Gregg Engles, chairman and chief executive officer.

Dean Foods said a more favorable commodity environment and a continued focus on of cost reduction, price realization, and sales volume growth led to a strong quarterly performance at Fresh Dairy Direct. Operating income increased 18% to $101 million compared with the first quarter of fiscal 2011. Business segment sales increased 4% to $2.3 billion.

“Fresh Dairy Direct continued to outperform the industry from a volume perspective,” Mr. Engles said. “This, combined with price realization and cost reductions, resulted in strong first-quarter profit growth for F.D.D. Looking ahead, we will continue to focus on the fundamentals of the business: volume, price realization, and cost reduction. With our outlook for a relatively more stable commodity environment through 2012, we expect continued strong growth for the second quarter and the full year. For the full year, we expect low-teens operating income growth for Fresh Dairy Direct.”

Operating income for Dean’s WhiteWave-Alpro division increased 31% to $60 million when compared with the first quarter of fiscal 2011. Division sales rose 13% to $571 million.

Among the product categories at WhiteWave-Alpro, sales in the coffee creamers and beverages business platform increased more than 20% in the first quarter, driven by strong International Delight creamers sales and augmented by the rollout of new iced coffee products, according to the company. Sales of plant-based beverages, which include Silk branded soy, almond and coconut milk products, also increased more than 20% in the first quarter on accelerating growth of Silk PureAlmond beverages.

“At WhiteWave-Alpro, first-quarter top-line growth accelerated behind strength in our core products as well as strong early consumer interest in our new product introductions,” Mr. Engles said. “Looking ahead, we expect continued solid top- and bottom-line growth. Our Dallas plant start-up costs and marketing spend in support of new product launches will increase in the second quarter from the first quarter. Given the first quarter’s strong performance, however, we now expect full-year WhiteWave-Alpro operating income growth to be in the high-teens.”

Operating income for the company’s Morningstar business unit was $29 million, a 13% increase compared with 2011. Sales for the division increased 5% to $325 million.

Looking ahead, Mr. Engles said Dean Foods is expecting adjusted earnings per share for the second quarter to be in the range of 28c to 33c. He also adjusted the company’s full-year adjusted earnings per share guidance to be in the range of $1.10 to $1.20.

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