Milling & Baking News Corporate Profiles - October 2011 - (Page 82)

Company Overview Dean Foods Co. TruMoo chocolate milk launch comes amid sagging fluid milk volume fter strong results in 2009 and a profitable but less robust 2010, Dean Foods Co. suffered a loss in the second quarter of 2011, in part due to lower volume sales related to the sagging economy and financial stress of many consumers. Dean Foods introduced a reformulated, lower calorie chocolate milk, TruMoo, at the School Nutrition Association’s annual conference in July and launched the product for retail nationwide at the end of August. The Wendy’s fast-food chain began offering TruMoo nationwide in May. It contains 10% to 15% fewer calories and 15% to 20% less sugar than traditional chocolate milk, and has no high-fructose corn syrup. TruMoo chocolate milk is sold as fat-free in schools and 1% low-fat at retail, with regional variations, including strawberry, vanilla and coffee flavors available in gallons, half gallons, quarts and single serve. But that came after the June 30 end of the second quarter for which Dean Foods reported a net loss of $53 million compared with net income of $43 million, or 25c per share, for the second quarter of 2010. Net sales for the quarter were $3,299 million, up from $2,955 million in the second quarter of 2010, as the result of “the pass-through of higher dairy and overall commodity costs that were partially offset by lower volumes at Fresh Dairy Direct-Morningstar, as A well as continued solid sales growth at WhiteWave-Alpro,” the company said. “In many ways the second quarter of 2011 is a continuation of the trends we have seen over the last several quarters,” Gregg Engles, chairman and chief executive officer, said when results were released. “WhiteWave-Alpro again posted strong results and Fresh Dairy Direct-Morningstar continued to make progress toward profit stability against a backdrop of weak industry volumes.” The second quarter saw ongoing sagging fluid milk volume sales, which decreased by 1.1% from a year ago for Fresh Dairy Direct-Morningstar, which accounted for 84% of Dean Foods’ net sales in 2010. Second-quarter net sales for the segment increased 12% from 2010, but operating income was down 21%. The company’s Class 1 mover, which is a measure of the cost of milk, was up 21% from the first quarter of 2011 and up 41% from a year earlier. About 63% of Fresh Dairy DirectMorningstar’s sales were fresh milk in 2010. Second-quarter losses included a $131 million charge related to the Tennessee dairy farmer class action litigation, the company said. In July Dean Foods said it had reached agreement to settle the litigation that was set to go to trial in August, although later action by plaintiffs left final settlement somewhat unclear. Gregg Engles Losses were partly mitigated by continued growth in the WhiteWave-Alpro segment, which saw second-quarter sales up 12% from a year ago and operating income up 13%. The gains resulted from “mid-teen” sales increases in Horizon Organic milk and branded creamers, including International Delight and Land O’Lakes, as well as gains in Silk PureAlmond and Silk Pure Coconut, the company said. The WhiteWave-Alpro segment made up about 16% of Dean Foods’ total net sales in 2010. Joseph Scalzo resigned as president and chief operating officer of Dean Foods in February, just six months after assuming the dual roles. Mr. Engles assumed his operating responsibilities. A replacement was not named. CP F ast acts Gregg Engles, chairman and chief executive ofﬁcer, assumed operating duties of Joseph Scalzo, president and chief operating ofﬁcer, who resigned in February. A charge of $131 million related to settlement of southeastern dairy farmer litigation added to Dean Foods’ second-quarter loss. Dean launched TruMoo chocolate milk with less sugar, lower calories in July. The product went nationwide in August. 82 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2011

Milling & Baking News Corporate Profiles - October 2011