Dean Foods shares jump
Dean Foods shares jump
2011-05-11 just-food.com
US: Dean Foods shares jump on raised earnings forecast
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. 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". "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.
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