Advertise in Print | Subscriptions
Published May 11, 2015, 08:20 AM

Dean Foods profit beats estimates as raw milk costs fall

Dean Foods Co, the largest U.S. milk processor, reported a better-than-expected quarterly profit as the company did not pass on the benefits of falling milk prices to consumers.

By: Staff Report, Reuters

Dean Foods Co, the largest U.S. milk processor, reported a better-than-expected quarterly profit as the company did not pass on the benefits of falling milk prices to consumers.

The company's shares rose almost 7 percent to $17.40 in premarket trading on Monday.

The maker of Meadow Gold and Dean's Milk forecast current-quarter adjusted earnings of 20-30 cents per share. Analysts on average were expecting 20 cents, according to Thomson Reuters I/B/E/S.

Dean Foods said retailers focused on restoring profitability to dairy products in the first quarter ended March 31. The company reported losses in the initial three quarters of last year after raw milk costs spiked due to growing exports and shrinking cattle herds.

Milk exports are falling this year as demand falls in China, which had increased imports of U.S. dairy after a milk safety scandal in 2013.

Russia's ban on U.S. milk and dairy imports has also affected demand.

Raw milk prices in the first quarter fell 25 percent to $16.79 per hundred-weight from a year earlier, Dean Foods said.

Net loss attributable to Dean Foods widened to $73.7 million, or 78 cents per share, in the first quarter, from $9 million, or 9 cents per share, a year earlier.

The first-quarter loss included costs of early extinguishment of debt and a $109.9 million non-cash charge related to the launch of its DairyPure brand.

Excluding items, the company earned 24 cents per share. Analysts on average had expected 18 cents per share, according to Thomson Reuters I/B/E/S.

Dean said last week it will combine its regional and local milk brands under a national brand, DairyPure, which will sell milk free of antibiotics and artificial growth hormones.

Net sales in the quarter fell 12.4 percent to $2.05 billion, below analysts' average estimate of $2.10 billion.

Up to Friday's close, shares of the 90-year-old company had fallen 16 percent this year.

Tags: