DF Dean Foods Company New

Dean Foods Co. said it Tuesday that it doesn't expect a planned Wal-Mart Stores Inc. dairy processing plant in Indiana to have a material effect on its financial results.

Shares of the U.S. milk processor rose 2.7% to $17.37 after hours.

In a regulatory filing, Dean Foods said it currently estimates Wal-Mart's planned plant will result in the loss of roughly 100 million gallons of very-low margin, private-table fluid milk volume beginning late next year.

"It's disappointing to learn of any potential loss of business, but we remain confident in our future and the strategic plan, " Dean Foods Chief Executive Gregg Tanner said.

Dean has been aiming to shift more of its business toward branded milk and ice cream products that command higher profits in grocery stores' milk cases and freezer sections, at a time when alternatives like almond and soy milk have cut into sales of the conventional kind.

"With more than a year advance notice and the low-margin nature of the potential lost private-label milk volume, we expect to govern our business such that this will result in very little impact to our financials," Mr. Tanner said.

Earlier on Wednesday, Morgan Stanley said Wal-Mart's move "underscores the challenges" facing Dean, though it will be more than a year before Wal-Mart's 250,000-square-foot Indiana plant is operational.

Dean Foods said its doesn't expect Wal-Mart's plans will affect Dean's sales of its national brands, DairyPure and TruMoo, or sales of its nonfluid milk products.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

March 22, 2016 17:55 ET (21:55 GMT)

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