February 21, 2012

 

 

Highlighted by a return to growth in its fluid milk business and continued strong performance from its branded businesses, Dean Foods Company announced fourth quarter financial results.

 

"2011 was a year of transition for Dean Foods, and we exited the year much stronger than we entered it," said Gregg Engles, Chairman and CEO. "After two years of significant pressure on the fluid milk business, our continued efforts to reduce costs and the stabilisation of milk costs led to a return to over-year profit growth in the fourth quarter at Fresh Dairy Direct.

 

In a release on February 15, for the fourth quarter of 2011, the Company reported a loss of US$0.05 per diluted share, compared to a fourth quarter 2010 loss of US$0.11 per diluted share. On an adjusted basis, fourth quarter 2011 diluted earnings per share were US$0.27, an 80% increase from the US$0.15 per diluted share earned in the prior year's fourth quarter.

 

For the fourth quarter of 2011, the net loss attributable to Dean Foods totalled US$10 million, compared to a net loss of US$21 million in the prior year's fourth quarter. Adjusted net income for the fourth quarter was US$51 million, an 89% increase from US$27 million in the fourth quarter of 2010.

 

Net sales for the fourth quarter totalled US$3.3 billion, compared to US$3.2 billion of net sales in the fourth quarter of 2010. Consolidated operating loss in the fourth quarter totalled US$19 million, compared to consolidated operating income of US$63 million in the fourth quarter of 2010. Adjusted fourth quarter consolidated operating income totalled US$135 million, compared to US$112 million in the fourth quarter of 2010.

 

Fourth quarter 2011 corporate expense totalled US$46 million, 13% lower than the US$53 million reported in the fourth quarter of 2010. Net cash provided by continuing operations for the year ended December 31, 2011 totalled US$449 million, compared to US$526 million in 2010. Free cash flow provided by operations, which is defined as net cash provided by continuing operations less capital expenditures, totalled US$123 million for the year ended December 31, 2011, compared to US$224 million in 2010.

 

The Company reported a loss of US$8.59 per share for the full year 2011, as compared to earnings of US$0.50 per diluted share for the full year 2010. The loss for the year was driven by a goodwill impairment charge related to Fresh Dairy Direct of US$1.6 billion, net of tax, in the second half of 2011. On an adjusted basis, the Company earned US$0.77 per diluted share for the full year 2011, compared to US$0.80 for the full year 2010. For the full year 2011, consolidated operating loss totalled US$1.8 billion, in comparison to consolidated operating income of US$400 million in 2010. On an adjusted basis, full year 2011 consolidated operating income totalled US$464 million, compared to US$472 million for the full year 2010.

 

Net loss attributable to Dean Foods totalled US$1.6 billion for the full year 2011, compared with net income of US$91 million in the previous year. On an adjusted basis, net income for the full year 2011 totalled US$141 million, compared to US$147 million in 2010. Net sales for the year ended December 31, 2011 totalled US$13.1 billion, compared to US$12.1 billion for the same period last year. For the full year 2011, corporate expense totalled US$187 million, compared to US$208 million for the full year 2010.

 

"Looking ahead, we are cautiously optimistic as we enter 2012," continued Engles. "Our biggest concerns are continued fluid milk category weakness and industry pricing pressures. Our 2012 plans assume flat FDD volume, excluding the impact of divestitures. Additional category weakness would introduce incremental risk to our plan. However, we believe our actions to significantly reduce supply chain and overhead costs and simplify the FDD organisation have positioned the business to stabilise and compete effectively in a challenging marketplace. Our current 2012 forecasts for raw milk costs suggest a more stable commodity environment than in recent periods. Following a decline in the first quarter, we expect relatively flat raw milk costs for the balance of the year. Any significant raw milk cost inflation from current forecasts would present a challenge for our outlook.

 

"Corporate costs will provide a tailwind as SG&A cost reductions taken in the latter part of 2011 and early 2012 drive over-year expense favourability. Adding it all up, we expect full year consolidated operating income growth to be in the high-single to low-double digits. Weighing all of these factors, we expect adjusted diluted EPS growth of between 13-24%, or adjusted diluted earnings of between US$0.87 and US$0.95 per share."

 

Dean Foods is a food and beverage company in the US and a European company focused in branded plant-based foods and beverages.