Dean Foods has announced a round of job cuts following a slump in its first quarter profits.
The US company has posted a 43% fall in first-quarter profits, as costs linked to acquisitions made last year and to restructuring throughout the business hit the dairy group’s bottom line. Operating income fell from $192.8 million (EUR156.7m) last year to $119.1m (EUR96.7 m) in the first quarter of the current fiscal year. Net sales were up almost 10% to $2.97bn (EUR2.41bn) thanks to Dean Foods’ ability to pass through higher commodity costs and to “solid” growth from the “value-added brands” within its WhiteWave-Alpro division.
Up to 400 jobs will be lost as a result of the company’s slump in profits. The job losses will occur in its largest division, Fresh Dairy Direct/Morningstar, which sells milk and other traditional dairy products under private labels and regional brand names. The cuts, which are expected to save the company $25m (EUR20.3m), follow on from 150 jobs which were lost earlier this year.
The company’s CEO Gregg Engles has blamed its poor profit picture on retailers taking “zero profit” on their own store-brand milk. “Our most profitable brands, the ones with the highest [price] premiums, suffered the most,” says Engles. He called the pressure on milk prices intense.