Dean Foods Co. (DF) swung to a fourth-quarter profit as the
company benefited from a comparison with a year-earlier quarter
bogged down by large charges, while revenue climbed.
"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," Chief Executive
Gregg Tanner said. "Our primary focus for the balance of 2013 is on
the elimination of costs, particularly fixed costs."
Dean Foods had seen its bottom line pressured by higher prices
for raw milk, by far its biggest expense. While milk costs have
begun to stabilize, the company continues to face increased
competition from private-label brands as grocers offer low-cost
milk to lure customers into their stores.
In December, Dean sold its Morningstar Foods business to
Montreal-based Saputo Inc. (SAPIF, SAP.T), Canada's largest dairy
processor, for $1.45 billion. And before that, Dean Foods spun off
WhiteWave Foods Co. (WWAV), the seller of Horizon Organic dairy
products and Silk soy milk, in a $391 million initial public
offering. It still owns about 87% of WhiteWave.
For the quarter, Dean Foods reported a profit of $37 million, or
20 cents a share, compared with a loss of $9.9 million, or five
cents a share, a year earlier. The year earlier included an income
tax benefit of $74.7 million and a goodwill impairment charge of
$149.8 million. Stripping out one-time items, adjusted earnings
were 40 cents from 27 cents. The company in November expected
per-share earnings between 27 cents and 32 cents.
Revenue increased 3.8% to $3.04 billion. Analysts polled by
Thomson Reuters most recently projected $3.37 billion.
Gross margin narrowed to 23.9% from 24.1%. Total operating costs
and expenses declined 15%.
The company recorded $3.9 million in income from discontinued
operations versus $10.5 million a year earlier.
Including its ownership of White Wave, the company projected
per-share earnings between $1 to $1.10 for the year, while analysts
recently expected $1.29. For the current quarter, the company
forecast per-share earnings of 22 cents to 27 cents, while analysts
expected 30 cents.
Shares closed Tuesday at $$18.39 and were inactive premarket.
The stock has risen 68% in the past 12 months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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