Dean Foods Surges on Improved Outlook

DALLAS ( TheStreet) -- Dean Foods ( DF) beat quarterly profit expectations and raised its 2011 outlook thanks to strong demand for its Horizon Organic brand of milk.

Dean Foods now expects to earn between 67 and 75 cents per share this year, up from its prior outlook for a profit of 55 to 65 cents per share. The guidance came in far ahead of analysts' call for 2011 earnings of 58 cents per share.

Investors, clearly pleased with the profit outlook, bid Dean Foods shares 13.9% higher to trade at $12.51 in morning trading Tuesday. More than 3.6 million shares changed hands less than 30 minutes into the trading session, compared with their average daily volume of just 3.5 million.

Dean Foods said it worked more aggressively to cut expenses in the recent quarter as commodity costs continued to rise. The producer of milk, dairy and dairy-related products cut 140 jobs, and expects to more than double its earlier goal of cutting $30 million in selling, general and administrative expenses from 2010.


As a roster of food and beverage companies have also announced, Dean Foods said it may raise prices on some products to offset rising costs, and has already been able to pass on some costs to consumers at its Fresh Dairy Direct-Morningstar segment, where demand was softer in the recent period.

At its WhiteWave-Alpro business, which sells Horizon Organic milk and Land O'Lakes butters and creamers, sales rose 7% to $507 million.

Tyson Foods ( TSN), which said Monday that rising feed costs offset higher prices leading to flat year-over-year earnings in its recent quarter, raised prices for chicken, beef and pork as global grain costs surged.

Sara Lee ( SLE), Starbucks ( SBUX), ConAgra Foods ( CAG), Kellogg ( K) and Coca-Cola ( KO) have all said recently their financial results were impacted by higher commodity costs, and implemented price increases to help offset those costs.

Dean Foods' net income in the recent quarter came to $25 million, or 14 cents per share, down from $43 million, or 24 cents per share, in the year-earlier period. Total revenue grew 3% to $3.05 billion, from $2.96 billion.

Analysts expected Dean Foods to report a first-quarter profit of $10.1 million, or 6 cents per share, on revenue of $3.07 billion.

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here: Miriam Reimer.

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