The major food and beverage company expects dairy prices to climb through first half of 2011 before flattening out or declining slightly in the third and fourth quarters
Source: Dean Foods news release
Calling 2010 an “exceptionally difficult year,” Dean Foods announced today it earned $0.50 per diluted share for the full year 2010, as compared to $1.38 per diluted share for the full year 2009. On an adjusted basis, the company earned $0.80 per diluted share for the full year 2010, compared to $1.59 for the full year 2009.
“2010 was an exceptionally difficult year for Dean Foods, and our fourth quarter results reflect many of the same trends that have impacted the business all year,” said Gregg Engles, Chairman and CEO.
Dean Foods is one of the leading food and beverage companies in the United States and a European leader in branded soy foods and beverages. Its two operating divisions are Fresh Dairy Direct and WhiteWave-Morningstar. The company maintains plants and distributors in the United States and Europe.
Dean Foods’ “overall 2010 performance was materially below our plan,” Engles said.
Net income attributable to Dean Foods totaled $91 million for the full year 2010, compared with $240 million in the previous year. On an adjusted basis, net income for the full year 2010 totaled $147 million, compared to $277 million in 2009.
Looking ahead, Engles said, “While we do not see meaningfully better industry conditions in 2011, we do see more stability returning to important aspects of our business.”
Engles added that the consensus view of the dairy commodity outlook for 2011 “is effectively a mirror image of what the industry believed three months ago.”
“On our last earnings conference call, we expressed the view that milk prices would fall throughout the first half of the year before climbing back to current levels by year end,” he said. “Since then, however, prices have risen sharply, driven by global demand and poor weather in Australia and New Zealand.
“We now expect dairy commodity prices to climb throughout the first half before flattening out or declining slightly in the third and fourth quarters,” Engles added. “We expect a rather dramatic move up in dairy prices during the first quarter and early second quarter, which we have already experienced in butter. This inversion of the commodity outlook will clearly present a drag on first and second quarter earnings, and will push earnings out of the first half and into the back half compared to our thinking last fall.”
Engles also noted: “We expect the first half of 2011 to be particularly difficult as we battle soft volumes and spiking commodities. However, as we lap the most difficult challenges of 2010, as new business comes on line, and as our cost reduction efforts accelerate further, we expect results to strengthen in the back half of the year, and to exceed 2010 performance by the fourth quarter. Our first quarter is historically our weakest quarter, and we expect it will be without doubt the most difficult quarter of this year as we chase the unexpected spike in dairy commodity costs, experience weak volumes, and begin to accrue incentive compensation at normal rates.”
Read the full report at: http://www.deanfoods.com/our-company/news/press-release.aspx?StoryID=1529517
