Dean Foods 4Q adj. profit meets Street's view
DALLAS (AP) — A challenging outlook from Dean Foods sent shares plunging more than 10 percent early Tuesday as commodity prices soar.
The nation's largest milk processor recorded a loss for the fourth quarter Tuesday, though that was largely attributable to the early retirement of debt and other one-time charges that were foreseen by the analysts that follow the company.
Yet Dean faces headwinds from a number of angles heading into 2014, the first being input costs.
"Current dairy commodity prices have moved near or beyond all-time highs despite strong global production growth," said CEO Gregg Tanner. "On our last earnings conference call, we expressed a view that raw milk prices would begin to fall in the early part of 2014, before moderating and rising slightly over the back half. However, since then, raw milk prices have risen sharply driven by global demand for imported dairy products."
And, after a subpar 2013 in which bonus targets were not reached, the company expects to pay out incentives at targeted levels.
"This higher level of incentive compensation is expected to be a drag on our financial performance in 2014," Tanner said.
Dean Foods now anticipates 2014 adjusted earnings between 73 and 86 cents per share, well short of the $1.12 cents that Wall Street was looking for.
Shares fell $1.55 to $13.65.
Dean lost $37.7 million, or 40 cents per share, for the three months ended Dec. 31. That compares with earnings of $28.1 million, or 30 cents per share, a year earlier.
Removing a $63 million loss on early debt retirement, $10 million in restructuring charges and other items, earnings from continuing operations were 18 cents per share, in line with Wall Street expectations.
Revenue for the Dallas company declined 7 percent to $2.3 billion from $2.46 billion, also about what analysts had expected, according to a poll by FactSet.
For the year, Dean Foods Co. — whose brands include Mayfield, Oak Farms and Tuscan — earned $813.2 million, or $8.58 per share. That's up from $158.6 million, or $1.70 per share, in the prior year.
The company got a boost last year from the sale of organic dairy companies WhiteWave and Morningstar.
Adjusted earnings were 86 cents per share.
Annual revenue fell 3 percent to $9.02 billion from $9.27 billion.