Dean Foods Swing into Fiscal Q4 Profit, Outlook on Q1 Weak (DF)

Wednesday, February 13, 2013 10:53 AM
Dean FoodsDean Foods Company (NYSE: DF) swung to a profit in its fiscal fourth quarter, thanks to its cost cutting measures, stabilizing price of milk, higher revenue and lower onetime charges. Company’s results were impacted by a huge goodwill impairment charge in the year earlier quarter. Lately, Dean Food’s bottom -line has felt the pinch due to high prices for raw milk, which is its biggest cost component by a long way. Although prices have started to stabilize, the company is facing stiff competition from private- label brands as grocers in order to entice customers offer low-cost milk supplied by these manufacturers. Now in order to counter the growth of private-label brands the company is focusing on cost cutting measures. "”Building on our successful cost reduction actions in 2012, we expect to dramatically accelerate our efforts to offset the financial impact of the recently lost volumes.  Our primary focus for the balance of 2013 is on the elimination of costs, particularly fixed costs”, said Chief Executive Gregg Tanner in a statement. For the fiscal fourth quarter, Dean Foods reported a profit of $37 million or 20 cents a share, compared to a loss of $9.9 million or 5 cents a share. in the year earlier period, the company took a charge of $149.8 million linked to a goodwill impairment and also included an income tax benefit if $74.7 million. Excluding onetime items, adjusted or non-GAAP earnings stood at 40 cents compared to 27 cents in the year earlier quarter. Earlier in November the company forecasted earnings to be in the range of 27 cents to 32 cents. Revenue during the period climbed 3.8% to $3.04 billion. Analysts polled by Thomson Reuters most recently forecasted revenue of $3.37 billion. Gross margin shrank to 23.9% from 24.1% but total operating costs and expenses also fell by 15%. For the fiscal 2013, the company expects earnings (including the results from its ownership of White Wave), to be in the range of $1 t0 $1.10 a share. In the current quarter, the Company projected earnings of 22 cents to 27 cents, falling short of analysts’ estimation of 30 cents a share.

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