CHICAGO -(Dow Jones)- Dean Foods Co. (DF) said Tuesday that it sees "continued challenges" for its milk business from retailers, but that it is on target to exceed cost-cutting targets set in early 2009. The dairy producer's profits have been hurt throughout the past year as retailers have demanded price concessions, using cheaper milk as a way to lure customers looking for bargains in the recession. Dean Foods chairman and CEO Gregg Engles said in a presentation to investors that the outlook for the milk business remains murky. While the pressure to reduce prices over the past 18 months feels like it is "starting to peter out," that does not mean prices will rebound, he said. The company is dealing with the pressure in part by reducing costs. It has cut 900 jobs, or 4% of the workforce, so far in 2010. "Our strategy toward lowering costs is our absolute highest priority," Engles said. Joe Scalzo, president and chief operating officer, said the company is on track to meet its three-to five-year goal of cutting $300 million in costs, set in February 2009, during 2011. Beyond that, the company should see "at least $100 million in savings annually for the foreseeable future," he said. -By Ian Berry, Dow Jones Newswires; 312-750-4072; ian.berry@dowjones.com
