The problems at US dairy giant Dean Foods show no sign of abating with the company set to cut up to 700 jobs.
Dean Foods, the largest milk processor in the US, has suffered as dairy costs continue to rise and the company today (2 October) pointed to a mounting raw materials bill for its decision.
“Rapidly increasing and record high dairy commodity costs have created a very challenging operating environment and 2007 results have been well short of our expectations,” admitted Gregg Engles, chairman and CEO. “The third quarter has been particularly challenging as dairy commodity costs have risen sharply, hitting all time highs.”
Engles added: “This is by far the most difficult operating environment in the history of the company.”
In a bid to reduce costs, Dean Foods said it would cut up to 700 jobs from its workforce. “It is a tough decision but it is a necessary action to improve our competitive position,” Engles said.
The company also cut its earnings guidance for the third quarter. CFO Jack Callahan blamed “unprecedented” costs and a glut of organic milk in the US.
“We now expect earnings per share to be approximately $0.15 per share in the third quarter and approximately $1.25 per share for the full year.”