Volume Milk Sales Drop at Dean Foods but Profits Triple

23 Feb 2016 --- Dean Foods, the largest milk processor in the US, has reported that its profits have more than tripled in the fourth quarter but has warned of declining milk sales by volume. Milk volume sales fell year-on-year from 683 million to 658 million gallons in the fourth quarter, a 3.6 percent decline.

Dean Foods also warned that milk volume sales will fall in the low single digits in the first quarter of this year.

Speaking on a conference call, Dean Foods chief executive Gregg Tanner blamed the fall on an oversupply of milk in some markets along with the company losing some private-label business.

The decline will be a concern for Dean Foods, as the rate of fall in volume milk sales is markedly lower than the industry average.

Dean Foods processes milk it buys from farmers and then sells it on to retailers and other outlets.

Dean Foods, which employs more than 17,000 people makes more than 50 dairy brands including DairyPure and Fruit Rush, reported its sales had fallen from $2.4 billion to $2 billion in the three months to December 31.

Its profits jumped from $5.3 million to $18.4 million helped by an improvement in the overall dairy category and lower commodity prices, the company said.

The company is focusing its marketing on its DairyPure brand, its overarching label for all the milk it produces across its regional dairies.

The brand has annual sales of around $2.5 billion and Dean Foods is hoping it can help offset a long standing decline in US milk consumption

Tanner added: “The fourth quarter marked the successful completion of a very strong year. I’m very pleased with the sequential improvements we saw in our operational and financial performance from Q3 to Q4. I believe the 2015 financial results demonstrate that we’re driving the right initiatives and agenda.”

“As I look to the future, I believe our financial position and the momentum of our strong operating performance will allow us to continue to grow our business and create shareholder value.”

“Turning to the forward outlook in the first quarter, with the continuation of commercial and brand initiatives, diligent cost focus, and an overall favourable commodity environment, we expect our operating and financial momentum to continue.” 

Dean Foods shares rose 2.6 percent during trading after its financial results.