Big, bad, bruising day for dairy maker Dean Foods (DF), which this morning beat Q1 revenue estimates, reporting $2.97 billion versus $2.93 billion expected, but missed analysts’ EPS estimates by 5 cents at 23 cents per share.
The company also forecast Q2 EPS of 23 cents to 28 cents, way, way below the 41 cents expected, saying stiff price competition for dairy products is likely to last for some time.
“That makes it difficult to provide accurate guidance beyond the immediate quarter,” said the company.
That price war combined with the Q1 hit already could hurt profit by $100 million for the year, the company said, which would mean 55 cents per share. Analysts are currently forecasting $1.69.
The dairy products business saw a 6% rise in revenue on higher volume and also the pass-along of higher costs. Operating earnings, however, were hit as consumers traded down to lower-priced milk in the company’s privately branded category.
Meantime, the creamer business, including Land o’ Lakes and “Silk” brands, saw a 25% rise in sales and saw a 54% rise in operating profit thanks to cost controls.
The company said it would split the milk and creamers business into two reporting segments going forward.
Dean is “accelerating” cost reduction efforts, it said, cutting 350 to 400 jobs among other measures. That should save the company $25 million annually, it said.
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