Food Business News - May 22, 2012 - 58

Dairy Business

Dean Foods earnings rise on cost control measures
DALLAS — A focus on reining in costs led to improved earnings for Dean Foods Co. during the ﬁrst quarter of ﬁscal 2012. For the quarter ended March 31, Dean Foods earned $37,883,000, equal to 21c per share on the common stock, up 62% from $23,382,000, or 14c per share, in the same period a year ago. Sales during the quarter rose 5% to $3,214,094,000 from $3,049,854,000 during the previous year. Dean Foods said a more favorable commodity environment and a continued focus on cost reduction, price realization, and sales volume growth led to a strong quarterly performance at Fresh Dairy Direct. Operating income increased 18% to $101 million compared with the ﬁrst quarter of ﬁscal 2011. Business segment sales increased 4% to $2.3 billion. “Fresh Dairy Direct continued to outperform the industry from a volume perspective,” said Gregg Engles, chairman and chief executive ofﬁcer. “This, combined with price realization and cost reductions, resulted in strong ﬁrst-quarter proﬁt growth for F.D.D. Looking ahead, we will continue to focus on the fundamentals of the business: volume, price realization, and cost reduction. With our outlook for a relatively more stable commodity environment through 2012, we expect continued strong growth for the second quarter and the full year. For the full year, we expect lowteens operating income growth for Fresh Dairy Direct.” Operating income for Dean’s WhiteWave-Alpro division increased 31% to $60 million when compared with the ﬁrst quarter of ﬁscal 2011. Division sales rose 13% to $571 million. Among the product categories at WhiteWave-Alpro, sales in the coffee creamers and beverages business platform increased more than 20% in the first quarter, driven by International Delight creamers sales and augmented by the rollout of new iced coffee products, according to the company. Sales of plantbased beverages, which include Silk branded soy, almond and coconut milk products, also increased more than 20% in the ﬁrst quarter on accelerating growth of Silk PureAlmond beverages. “At WhiteWave-Alpro, ﬁrstquarter top-line growth accelerated behind strength in our core products as well as strong early consumer interest in our new product introductions,” Mr. Engles said. “Looking ahead, we expect continued solid top- and bottom-line growth. Our Dallas plant start-up costs and marketing spend in support of new product launches will increase in the second quarter from the ﬁrst quarter. Given the ﬁrst quarter’s strong performance, however, we now expect full-year WhiteWaveAlpro operating income growth to be in the high-teens.” Operating income for the company’s Morningstar business unit was $29 million, a 13% increase compared with 2011. Sales for the division increased 5% to $325 million. Looking ahead, Mr. Engles said Dean Foods is expecting adjusted earnings per share for the second quarter to be in the range of 28c to 33c. He also adjusted the company’s full-year adjusted earnings per share guidance to be in the range of $1.10 to $1.20, an increase compared with 87c to 95c per share previously announced. DBN

Ice cream, frozen dessert market at $25.1 billion in 2011
ROCKVILLE, MD. — Sales of ice cream and frozen desserts were up 2.4% and topped $25.1 billion in 2011, according to market research company Packaged Facts. In addition, category sales are expected to reach $28.6 billion by 2016. Yet the market for ice cream and frozen desserts is mature with 92% of all U.S. households purchasing such products. As a result, real growth in the market is hard to produce. David Sprinkle, publisher of Packaged Facts, said retailers and food service providers may grow their businesses by creating and marketing products that speak to consumers on an emotional level. There should be an emphasis on localized strategies and niche products that represent true differentiation with integration of new media into the marketing mix, he said. “Ice cream and frozen desserts are comfort foods that have long provided relatively inexpensive respites from economic woes,” Packaged Facts said in its “Ice cream and frozen desserts in the U.S.” report. “In addition, although it might seem counterintuitive given the post-recessionary ﬁscal conservatism, many super-premium ice cream and frozen desserts are performing better than the market as a whole.” Packaged Facts also said snacking trends play positively into the ice cream and frozen dessert market as a consumer survey revealed that among adults who have eaten ice cream and frozen desserts, 44% have eaten packaged regular ice cream as a snack or meal in the past six months. In addition, 27% have eaten ice cream sandwiches, 22% have had ice cream from a scoop shop and 20% have had packaged ice cream cones as a snack or meal in the past six months. The market is also competitive with Nestle and Unilever dominating. But there are hundreds of regional and local competitors the industry giants go head-tohead with on a fairly even basis in some geographic markets as many of the smaller brands have loyalty that has been developed over the years. DBN

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