Dairy producer Dean Foods Co. (DF) on Tuesday reported a 47 percent decline in profit for the second quarter from last year as an increase in sales was more than offset by lower volume and higher costs.
Adjusted earnings per share for the quarter missed analysts’ expectations. Looking ahead, the company lowered its earnings outlook for fiscal 2017, saying its volume shortfall will drive lower financial results than its previous expectations. The company’s shares are down more than 6 perecnt in pre-market activity.
Chief Executive Officer Ralph Scozzafava said, “In the second quarter, we faced a challenging and rapidly evolving retail environment. We experienced volume pressure from both a macro and competitive perspective that impacted our total volume performance within the quarter, and we anticipate this will carry forward for the remainder of 2017.”
Net income for the second quarter was $17.65 million or $0.19 per share, compared to net income of $33.37 million or $0.36 per share in the prior-year quarter.
Excluding items, adjusted earnings for the quarter were $0.21 per share, compared to $0.38 per share in the prior year.
On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.31 per share for the quarter. Analysts’ estimates typically exclude special items.
However, net sales for the quarter rose 4 percent to $1.93 billion from last year’s $1.85 billion. Wall Street expected revenues of $1.94 billion.
Total operating costs and expenses for the quarter increased 0.4 percent from last year to $422.22 million.
Total volume across all products was 615 million gallons for the quarter, representing a 2.7 percent decline from the year-ago period.
Based on fluid milk sales data published by the USDA through May, U.S. fluid milk volume decreased 2.9 percent year-over-year in the quarter on an unadjusted basis. On this same basis, Dean Foods’ share of U.S. fluid milk volumes decreased by 30 basis points year-over-year.
Raw milk costs in the quarter decreased roughly 9 percent from the first quarter, but increased 15 percent from the same period last year.
For fiscal 2017, Dean Foods lowered its outlook for adjusted earnings to a range of $0.80 to $0.95 per share from the prior range of $1.35 to $1.55 per share. The Street estimates earnings of $1.27 per share for the year.
by RTT Staff Writer
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