Dean Foods reports 50% jump in Q1 net profit

US dairy company Dean Foods has reported a 50% jump in its net earnings to $37.9m in the first quarter of 2012, compared to $25.3m in 2011, driven by growth across all its divisions and overall cost savings.

Net sales in the quarter ended 31 March 2012 grew 5.4% to $3.2bn, compared to $3bn in 2011.

Dean Foods chairman and CEO Gregg Engles said the company has reported strong first quarter results, driven by stronger than forecasted growth across each of its three operating segments, and supported by tight expense control across the business.

"As a result, consolidated adjusted operating income increased 42% above year ago levels," Engles added.

"Our financial performance was further bolstered by declining interest expense, resulting in first quarter adjusted diluted earnings per share of $0.31, more than double the previous year and the sixth straight quarter we have delivered adjusted EPS at or above our guidance."

The company’s WhiteWave-Alpro division, which offers a range of branded dairy, soya, and plant-based foods and beverages, posted an all-time record sales increase of 13% to $571m, compared to $507m in 2011, due to new product launches and continued investment in marketing and brand building.

Operating income of the division soared 31% to $60m in the first quarter of the financial year 2012.

The Fresh Dairy Direct segment, which is the company’s largest revenue generator, saw 4% net sales increase to $2.3bn, helped by favourable commodity environment and cost reduction, while the operating income rose 18% to $101m.

The Morningstar Foods division, a warehouse delivery dairy business that sells traditional and speciality dairy items, registered a 5% rise in net sales to $325m, due to increased sales across both retail and foodservice channels, and a 13% increase in operating income to $29m.

The rise in international milk prices has significantly dented the company’s margins, but the recent ease helped the Dean Foods to register a strong performance. The costs of raw milk in the first quarter of 2012 were higher than in 2011, but they had fallen 8% from the fourth quarter.

For the second quarter, the company expects adjusted earnings per share of $0.28-$0.33, and for the full-year it has forecasted adjusted earnings of $1.10-$1.20 per share.