Wednesday, February 11, 2009

Dean Foods

Dean Foods Co.'s (DF) fourth-quarter net income more than doubled despite declining revenue as the nation's largest dairy processor benefitted from retreating raw dairy and energy costs. As a result, Dean Foods projected first-quarter profits above analysts' views. The company now sees per-share earnings of 38 cents, while analysts were expecting 36 cents. For the year, Dean Foods reiterated its November earnings forecast.
Packaged-food companies are feeling the pain of weaker consumer spending amid the U.S. recession as shoppers cut back on even small purchases, trade down to less expensive private label, or store branded, products and delay refilling their pantries. Retailers, including behemoth Wal-Mart Stores Inc. (WMT), are also slowing orders as they work down inventory, leading some food companies to cut forecasts. Still, consumer staples companies, including Dean Foods, are expected to hold up better than the makers of more discretionary products.
Dean Foods has been cutting costs, including reducing its work force late last fall, as it improves its supply chain and ramps up its distribution network. Dean has also refined its pricing structure since 2007 when it was affected by some pricing lag issues, making it less susceptible to being caught on the wrong side of shifts in the federal dairy pricing program.

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