Dean Foods sees improved 2016 in results
Dean Foods Company in the US reported fourth quarter and full year 2016 results. It notes it has continued year-over-year improvement in total volume performance, operating income and earnings per share. the firm has made significant cost productivity throughout the entire supply chain, delivering over $80 million of gross savings. it is also experiencing growing strong brands through line extensions in DairyPure, the Friendly’s acquisition, and the Organic Valley partnership. Full year 2017 adjusted diluted earnings are expected to be $1.35-$1.55 (€1.27-€1.45) per diluted share; and first quarter 2017 adjusted diluted earnings are expected to be $0.12-$0.20 per diluted share.
Chief executive Officer Ralph Scozzafava says, “2016 was a strong year for Dean Foods. In the fourth quarter, we delivered 6% growth in both adjusted operating income per gallon and adjusted earnings per share. For the full year, our operating income per gallon grew nearly 21% versus prior year. Our adjusted earnings per share of $1.57 (€1.47) represents a nearly 28% increase over 2015. I am very pleased with the hard work this organisation has dedicated to driving improved results in support of our long-term strategic agenda.”
In November 2016, the company announced a strategic joint venture with CROPP, the largest independent organic farmer co-operative in the US, to bring the Organic Valley brand and its organic milk to retailers and consumers by leveraging Dean Foods’ selling organization, processing plants and refrigerated direct-to-store delivery distribution system. The joint venture, called Organic Valley Fresh, will operate on a 50/50 basis of ownership, governance and profit. The joint venture is expected to begin shipping product in mid-to-late 2017.
Total volume across all products was 653 million gallons for the fourth quarter of 2016, a 0.8% decline compared to total volume of 658 million gallons in the same quarter of 2015. Full year 2016 volumes totaled 2.6 billion gallons, a 2.1% decline versus 2015.
Based on fluid milk sales data published by the USDA through December, fluid milk volume decreased 1.2% year-over-year in the fourth quarter of 2016 on an unadjusted basis. On this same basis, Dean Foods’ share of US fluid milk volumes increased by 10 basis points year-on-year. Raw milk costs in the fourth quarter of 2016 increased roughly 6% from the third quarter of 2016 and decreased 2% from the fourth quarter of 2015.
