Shares in Dean Foods jumped today (10 May) after the US dairy giant raised its full-year earnings target despite a fall in first-quarter profits.
Dean Foods’ stock was up 12.75% at 10:49 ET in the wake of the company publishing its higher forecast and even after the drop in profits for the three months to the end of March.
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Chairman and CEO Gregg Engles said Dean Foods’ performance in the first quarter and its “expectations for the second” had led the company to raise its guidance for full-year EPS to $0.67-0.75 per adjusted diluted share.
In February, when Dean Foods reported its 2010 financial results, the company gave a forecast of $0.55-0.65 per adjusted diluted share.
Engles said the US dairy giant had had a “stronger start” to 2011 than the company had expected despite profits falling.
The Dean Foods chief, who has presided over a business that has suffered over the last 12 months from US retailers’ moves to cut prices on milk, said the company was on an “upward trajectory”.
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By GlobalData“Overall, the business is off to a stronger start than we had anticipated and we are somewhat encouraged as we look to the balance of the year,” Engles said.
“While we have a long way to go at [Dean Foods’ milk division] Fresh Dairy Direct-Morningstar, I am cautiously optimistic that the trajectory of our business is upward and that we are on a path for continued progress as we move through the balance of the year. In our other major segment, WhiteWave-Alpro continued to perform well, with both strong top and bottom-line growth against a tough overlap and unfavourable holiday calendar.”
The company’s first-quarter adjusted net income reached US$25m, compared to $43m a year earlier.
Dean Foods’ consolidated operating income dropped 11.7% to $106m due to lower profits at the group’s Fresh Dairy-Direct Morningstar unit.
The division did see sales rise 2% to $2.54bn but falling volumes and “continued pricing pressure” hit the unit’s profits.
Dean Foods’ second arm – Whitewave-Alpro – reported an 8% increase in operating income to $47.9m on the back of a 7% rise in sales to $507m.
Click here for the earnings release from Dean Foods.
