Dean Foods’ second-quarter results for 2017 show a decline in earnings compared to the same period last year.
The company said its earnings for the quarter tumbled 45% to $18 million, with profit also declining to $20 million – lower than $35 million in last year’s second quarter.
Dean Foods, the food manufacturer whose brands include Land O’Lakes, DairyPure and Friendly’s ice cream, will now lower its earnings outlook for fiscal 2017, saying its volume shortfall will drive lower financial results than its previous expectations. However, net sales for the quarter rose 4% to $1.93 billion from last year’s $1.85 billion.
Dean Foods chief executive officer Ralph Scozzafava said: “We faced a challenging and rapidly evolving retail environment. We experienced volume pressure from both a macro and competitive perspective that impacted our total volume performance within the quarter, and we anticipate this will carry forward for the remainder of 2017.”
With consumers showing an increasing demand for healthy and organic foods, there is vast competition from food manufacturers that cater specifically to that market.
Chief financial officer Chris Bellairs said: “For the second quarter, we continue to generate positive net cash from operating activities. We have used our internally generated cash flow to fund working capital and fixed asset investment and to improve the funded status of our pension plans.
“Our year-to-date cash flow has also been utilised to pay our dividends, invest in Good Karma Foods and acquire Uncle Matt’s Organic. We continue to maintain a sound balance sheet with all cash netted leverage at 2.25 times as of the second quarter of 2017.
“We are not satisfied with our performance and are determined to improve our execution.”
Scozzafava added: “We are aggressively addressing our cost structure and are targeting an incremental annual cost reduction between $40 million to $50 million across our general and administrative functions.”
© FoodBev Media Ltd 2017