Rising raw milk prices and an oversupply of organic milk has caused first-half profits to fall at US diary giant Dean Foods.
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The company said today (7 August) that underlying net profit reached US$91.4m during the first six months of the year, compared to $129.5m a year earlier.
The fall in earnings came despite a 10% rise in turnover to $5.5bn thanks in part to increased sales from the company’s WhiteWave Foods business.
“Our results are reflective of the unusually volatile and difficult environment we are operating in this year,” said Gregg Engles, Dean Foods chairman and CEO.
“Raw milk prices have increased steadily through the first half of the year, and have recently hit all-time highs.”
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By GlobalDataEngles added that the company’s Horizon Organic brand had undergone a period of “promotional pricing”, a strategy that, when combined with an oversupply of organic milk had “dampened” profits.
CFO Jack Callahan added that pressure from raw milk prices would continue during the third quarter.
