DALLAS, Texas (TheStreet) -- Dean Foods (DF) - Get Report has announced that it has suspended its full-year guidance after a drop in first-quarter net income -- and job cuts -- as the company continues to contend with aggressive price promotion by retailers in private-label milk.
Dean Foods said if retailers continue with these promotions, balance of the year operating profits could be impacted by up to $100 million; for now, the company is providing guidance for only the next quarter, where visibility is better. Uncertainties surrounding the rest of the year have led the company to hold-off on full-year guidance.
The company is expecting second-quarter adjusted earnings to be 23 cents a share to 28 cents a share, essentially in-line with first-quarter results, and below the consensus target of 41 cents a share.
On Monday, the company also announced that its largest segment, Fresh Dairy Direct-Morningstar, is planning to cut 350 to 400 positions in addition to about 150 positions that have already been eliminated so far this year. The action announced Monday will be rolled out over the balance of the year and is expected to result in about $25 million in annualized savings.
"To accelerate its cost reduction and capability building efforts, the company is increasing the scale and scope of its efforts to reduce costs to every area of its business including business segments, supply chain and corporate functions," Dean Foods announced in a written statement.
For the first quarter, net income attributable to Dean Foods totaled $43 million, or 24 cents a share, down from $76 million, or 48 cents a share, in the prior year's first quarter. On an adjusted basis, first-quarter earnings were 23 cents a share -- versus the consensus estimate of 28 cents a share -- compared with 52 cents a share a year ago.
Consolidated net sales totaled $2.97 billion -- increasing because of the pass-through of higher overall dairy commodity costs at Fresh Dairy Direct-Morningstar, the acquisition of Alpro and solid net sales growth among the value-added brands at WhiteWave-Alpro. Net sales a year ago were $2.7 billion.
Analysts on average were expecting revenue of $2.93 billion.
-- Reported by Andrea Tse in New York
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