Dean Foods Withdraws Forecast Amid Dairy Market Volatility

August 11, 2014 04:44 AM
 
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The largest U.S. dairy processor says it's operating in the most difficult environment in its history.

Aug. 11 -- Dean Foods Co., the largest U.S. dairy processor, withdrew its full-year earnings forecast as it said the company is operating in the most difficult environment in its history.

"The balance of the year appears rocky, with a continued unpredictable and volatile dairy commodity environment," Chief Executive Officer Gregg Tanner said today in the Dallas-based company’s second-quarter earnings statement. "For the time being, we are going to provide specific guidance only for the next quarter, where our visibility is better."

Dean forecast an adjusted third-quarter net loss of 5 cents to 15 cents a share. That compares with a 24-cent profit, based on the average of 11 analysts’ estimates compiled by Bloomberg.

The company is battling higher prices for raw milk. Class I Mover, a measure of raw milk costs, was on average 31 percent higher in the second quarter compared with a year earlier, Dean said today.

Dean fell 6.8 percent to $14.73 at 10:05 a.m. in New York. The shares earlier fell 10 percent, the most intraday since February.

In May, Dean said full-year earnings excluding one-time items would be at least 60 cents a share, down from a February forecast of 73 cents to 86 cents.

"As a result of the extreme dairy commodity environment, we face unprecedented challenges," Chief Financial Officer Chris Bellairs said in today’s statement.

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