US dairy giant Dean Foods has reported a second quarter operating income increase of 37%, citing “solid growth” across all operating segments.
The Dallas-based firm, which is the country’s largest dairy processor and distributor, recorded adjusted Q2 consolidated operating income totaling $157m – a 37% increase on the $114 million reported in the same period of 2011.
Earlier this year, Dean Foods reported “stronger than forecasted” results for the first quarter of 2012, which it partly attributed to the declining price of raw milk and solid growth across its segments.
Dean Foods CEO and chairman Gregg Engles has applauded the firm’s Q2 results and its continued momentum.
“We continued to build on our momentum in the second quarter, delivering strong growth across all of our operating segments,” said Engles.
“We are pleased with the progress we continue to make on all fronts, which is clearly translating into significantly improved financial performance and flexibility.”
The firm’s Fresh Dairy Direct business recorded operating income of $125m for the second quarter of 2012 - a 41% year-on-year increase on the $89m recorded in Q2 2011.
Dean Foods has attributed this to “continued volume outperformance of the industry, a favorable commodity environment, effective price realization and strong expense control.”
The firm’s WhiteWave-Alpro segment, which manufactures and markets soy and almond milk products as well as the Horizon Organic milk and dairy brand, meanshile recorded 31% growth in operating income reporting $58m.
Elsewhere, Dean Foods' Morningstar business reported operating income of $32m – a 19% increase on Q2 2011.
Dean Foods CEO Engles fully expects this momentum to continue into Q3 2012.
“Looking ahead at Q3 and the balance of the year, we expect continued strong performance across the business,” said Engles. “We expect first half momentum to continue at White Wave with strong volume driven net sales growth and operating leverage.”
“At Fresh Dairy Direct, we will continue to focus on the fundamentals of the business. Volume performance, price realization, and cost efficiency.”
“At Morningstar, solid customer growth, new product innovations, and a focused approach are expected to drive continued success for the segment over the balance of the year, resulting in mid-teens full year operating income growth.”
On another note, Dean Foods also announced that its wholly-owned subsidiary, the WhiteWave Foods Company, filed a registration statement with the US Securities and Exchange Commission for an initial public offering (IPO) of up to 20% of its common stock.
WhiteWave will seek a $300m initial public offering (IPO) on the New York Stock Exchange. Proceeds from the offering are expected to be applied to reduce Dean Foods’ outstanding debt.
Following the IPO, the WhiteWave Foods Company will own Dean Foods’ WhiteWave-Alpro business but Dean Foods will own at least 80% of the WhiteWave Foods Company common stock, which it intends to distribute to Deans Foods’ shareholders.
At the time of the offering, Gregg Engles will be appointed chairman and CEO of the WhiteWave Foods Company while remaining Dean Foods chairman. Gregg Tanner, who is currently president of the firm’s Fresh Dairy Direct segment, will be promoted to CEO of Dean Foods.