Dean Foods boss Ralph Scozzafava has said he is “impressed with the progress” the company is making, after it reported second-quarter revenue of $1.95 billion.
The figure was 1.3% stronger than the same period last year, when Dean Foods returned quarterly sales of $1.93 billion. Gross profit for this quarter stood at $432.8 million, but the company reported a net loss of $40 million.
It said this loss – part of a wider struggle – reflects expenses related to its enterprise-wide cost productivity plan.
Alongside the results announcement, the US dairy company has said that it now only expects to see benefits from its network optimisation plans beginning in the fourth quarter, and has lowered its adjusted earnings guidance for the remainder of the year.
Scozzafava said: “Our solid execution against our initiatives continued in the second quarter and I’ve been impressed with the progress our team is making. Our strong cash flow generation continued and we delivered a $13 million reduction in our adjusted general and administrative costs resulting from our enterprise-wide cost productivity plan.”
“We have a strategic plan that will guide us into the future and remain committed to delivering our target of $150 million in incremental annual run-rate savings through our enterprise-wide cost productivity plan. At the beginning of 2018, we set an aggressive plan focused on executing a robust set of commercial and cost productivity initiatives. We’re achieving our objectives in many areas.”
Scozzafava continued: “We’re experiencing significantly higher than expected non-dairy inflation along with continued retailer investment in private-label, which is impacting our branded product mix. Therefore, we now anticipate full-year adjusted diluted earnings per share in the range of $0.32–$0.52. We are also increasing our full-year free cash flow guidance to be in the range of $40–$60 million and reducing our full-year capital expenditure guidance to between $125 [million] and $150 million.
“Upon completion of our enterprise-wide cost productivity plan in 2019, our company will be a much leaner and more agile organisation.”
In July, Dean Foods increased its stake in dairy-free player Good Karma, making it the company’s majority shareholder.
At the time, Good Karma CEO Doug Raid said he was “thrilled” that Dean Foods had chosen to increase its investment in the business.
When FoodBev reported on the acquisition of the initial stake in May 2017, Dean Foods said that the partnership would “allow Good Karma to more quickly expand distribution across the US, as well as increase investments in brand building and product innovation”.
It was seen by outsiders as a vote of confidence in the promising dairy alternative yogurt category – and in particular for flaxseed, which has managed to forge a niche for itself alongside more mainstream offerings like almond yogurt and coconut yogurt.
Non-dairy foods have slowly grown in popularity, with more people claiming to be lactose intolerance than ever – despite often having no clinical diagnosis – and many consumers dropping dairy for lifestyle reasons.
That’s despite warnings from a UK charity that dairy-free diets could be bad for consumers’ bone health in later life.
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