DALLAS – Operating income growth within its Fresh Dairy Direct and Whitewave-Morningstar business units drove Dean Foods’ fiscal 2009 second quarter earnings 31% higher compared with the same period of the previous year. Net income for the quarter ended June 30 was $62,316,000, equal to 38c per common share on the common stock, compared with a net income of $48,885,000, equal to 32c per share, during the second quarter of fiscal 2008.
Sales for the quarter were $2,681,286,000 compared with $3,102,559,000 for the previous year.
"The second quarter marks another solid step forward," said Gregg Engles, chairman and chief executive officer. "Again, we posted strong financial results across the business, made continued progress against our strategic initiatives and further deleveraged the balance sheet. We believe we are firmly on track to deliver very strong full year results."
Dean’s Fresh Dairy Direct business unit experienced a fluid milk volume growth of 2.4% versus the balance of the industry, which saw a volume decline of roughly half a percent, according to the company. Fresh Dairy Direct net sales declined due to lower average dairy commodity costs. As a result, in spite of strong volume growth in the quarter, net sales declined 16% to $2.1 billion from $2.5 billion in the second quarter of 2008.
The low dairy commodity prices, combined with other commodity favorability, benefits from cost control efforts, and continued volume growth led to Fresh Dairy Direct operating income of $168.6 million in the quarter, an increase of 9% from $154.3 million in the second quarter of 2008.
"In the second quarter, the combination of strong volume growth, a favorable commodity environment, solid execution from our field teams and early benefits from our strategic initiatives across the manufacturing and distribution network led to strong operating results," said Harrald Kroeker, president of the Fresh Dairy Direct segment. "Competitive pressures continue, but the commodity environment remains favorable and our business has solid momentum entering the back half of the year."
Operating income in the second quarter for WhiteWave-Morningstar was $72 million, a 46% increase over $49.3 million in the second quarter of 2008. The positive results were driven by favorable dairy and energy commodity costs combined with supply chain efficiencies throughout the business unit.
For the first six months of fiscal 2009, Dean Foods’ net income was $137,516,000, equal to 87c per share. The results compare favorably to the first six months of fiscal 2008, when the company recorded net income of $79,657,000, equal to 55c per share. Sales for the period were $5,384,224,000 during 2009 compared with $6,179,519,000 during 2008.
"Commodities continue to be favorable, and our efforts to drive costs out of the business are getting traction and increasingly impacting results," said Mr. Engles. "While we see continued competitive activity in our fluid milk operations and are cautious about diminished commodity favorability in the future, our businesses carry significant momentum into the second half of the year.
"As a result, we are expecting adjusted diluted earnings per share of at least 30c in the third quarter and are increasing our forecast for the full year to at least $1.60 per adjusted diluted share."