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Dean Foods eyeing further growth to end 2012 after strong Q3

By Mark Astley , 09-Nov-2012

Dean Foods is eyeing further growth to close 2012, after strong third quarter performances from its Fresh Dairy Direct and WhiteWave-Alpro business segments.

The US dairy giant reported consolidated net sales for the period July to September 2012 of $3.1bn – compared to the $3.4bn achieved in Q3 2011. However, net income for the period increased. The firm reported net income of $36m – a vast improvement on the $1.5bn net loss reported last year.

Commenting on the firm’s Q3 performance, Dean Foods chairman Gregg Engles said that strong performances from its segments during the quarter has driven “expectations for further growth to close out the year.”

Dean Foods’ Fresh Dairy Direct segment recorded operating income of $94m for the period – an increase on the $75m achieved in Q3 2011.

The WhiteWave-Alpro segment reported a 25% operating income increase for the period, which it has attributed to strong performances from its Land O’Lakes and Horizon Organic brands.

Further growth

Looking ahead to Q4, Engles expects the “strong momentum” of WhiteWave-Alpro – which manufactures Horizon Organic brand products - to continue.

“Third quarter results were strong, and we expect continued momentum in the fourth quarter, with full-year segment operating income growth of around 20%,” said Engles.

Commenting on the firm’s Q4 Fresh Dairy Direct expectations, Engles said that the business’ third quarter performance had provided a bit of breathing space against the business’ full year target.

“At Fresh Dairy Direct, last quarter we said we expected mid-to-high teens full year operating income growth,” said Engles. “We expect the upside from the third quarter to more than offset the impact of higher than expected commodity costs and the effects of Hurricane Sandy in the fourth quarter.”

“The third quarters’ outperformance has provided a bit of breathing room against this target as we navigate a more challenging commodity environment in the fourth quarter, giving us confidence in our ability to hit our full-year segment operating income target.”

Meanwhile, Dean Foods expects its Morningstar full-year operating income to be above year ago levels.

Resignations and promotions

Meanwhile, two Dean Foods senior executives – Shaun Mara and Steve Kemps – have announced their plans to leave the company.

Mara will step down as executive vice president and chief financial officer of Dean Foods. Upon his departure, the current chief financial officer of Fresh Dairy Direct, Chris Bellairs, will be promoted to executive vice president and chief financial officer of Dean Foods.

Kemps, who currently holds the positions of executive vice president and general counsel of Dean Foods, will be replaced by Rachel Gonzalez – the current deputy general counsel of Dean Foods.

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