Dean Foods 3Q profit rises, misses expectations

The Dallas-based company reaffirmed its full-year guidance which is below Wall Street's current expectations and issued what one analyst called a "more subdued" outlook for 2009, saying investments in plant startups, research and development, shifting sales patterns and other factors will weigh on earnings in the next fiscal year.

The company also announced a new joint venture between its WhiteWave division and The Hero Group, producer of international fruit and infant nutrition brands Hero and Beech-Nut. The venture will introduce new innovative chilled-fruit products to North America.

News of the miss and lower-than-predicted expectations for 2009 sent the stock down Tuesday. Shares of Dean Foods fell $4.47, or 20.2 percent, to $17.69 in late morning trading after sinking to a 52-week low of $16.25 earlier in the session.

Dean Foods said its profit rose to $37.8 million, or 25 cents per share, in the three months ended Sept. 30 from $6.5 million, or 5 cents per share, last year. Excluding facility closings and reorganization costs, net income totaled 28 cents per share.

Revenue rose 3 percent to $3.19 billion from $3.12 billion a year ago.

Analysts polled by Thomson Reuters predicted a profit of 31 cents per share on revenue of $3.22 billion.

The company said the increase in profit was driven by better results in its DSD Dairy segment--which processes and distributes milk and other products--as well as lower interest expense as a result of lower debt and a lower effective tax rate. That was offset as shares outstanding rose 14 percent to 157.3 million.

Profitability at Whitewave-Morningstar division, which distributes Silk soy milk, Horizon organic milk and other products, was hurt by higher commodity costs and higher organic milk costs. But the company noted net sales of Horizon milk were up nearly 20 percent compared to last year as the company was able to push through price increases to customers.

The company issued 2009 guidance that was below analyst expectations. It said earnings per share would be affected by startup costs for the new joint venture, cost-savings measures, money the company has to pay for pensions and the slumping economy.