Dean Foods has posted a surge in third-quarter net income, which increased to US$37.8m, or $0.24 per share, up from $6.5m, or $0.05 per share, in the comparable period of last year.
Excluding one-off charges, notably restructuring costs, earnings rose to $0.28 per share from $0.14 per share, the company reported today (4 November). Adjusted third-quarter net income from continuing operations totalled $43.5m, compared to $18.7m in the third quarter of 2007.
Earnings gains were driven by stronger results in the DSD Dairy segment, lower interest expense due to debt reduction and a lower tax rate, Dean Foods said. However, these factors were partially offset by an increase in the number of shares outstanding.
Total sales for the company, whose brands include Horizon Organic and Silk soy milk, rose 2.5% to $3.19bn.
The group’s DSD Dairy business, which includes Dean Foods’ conventional dairy operations, posted a 21% jump in adjusted operating income amid lower raw dairy costs. Revenue at the unit climbed 1% as the company cut prices to boost volumes.
The WhiteWave-Morningstar unit, which includes ice cream, yogurt and organic products, saw earnings fall 4.2%, despite a 9% sales gain, due to increasing commodity costs and the continued impact of higher organic milk costs on WhiteWave’s Horizon Organic brand.
Gross margin rose to 22.9% from 21.2%.
Gregg Engles, chairman and CEO, commented: “Overall, it was a very encouraging quarter and positions us well to finish out the year strong.”
Dean Foods reiterated its full year earnings guidance and predicted that 2009 EPS is expected to grow in the mid-teens.
The company also announced that its WhiteWave division has formed a joint venture with The Hero Group, producer of fruit and infant nutrition brands Hero and Beech-Nut. The companies have signalled their intention to cooperate to chilled-fruit products for the North American market.
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