Dean Foods Co (NYSE:DF) reported strong third quarter earnings on Monday, November 10th, and forecast a profit for the fourth quarter after three straight losing quarters. It was also was the first time in seven quarters that the Meadow Gold and Dean’s Milk manufacturer topped average analyst estimates on earnings per share.
Shares of Dean Foods were up around $2 at $16.40 in afternoon trading in New York on Monday.
Details from third quarter earnings report
The net loss attributable to the company for the third quarter was $16 million, or 17 cents per share, compared to a profit of $415.1 million, or $4.35 per share, a year earlier.
The dairy product producer, however, only lost 3 cents per share, significantly less than the consensus analyst estimate of 13 cents, according to Thomson Reuters.
Moreover, net sales rose 8% to $2.37 billion, which was marginally above the consensus analyst estimate of $2.35 billion.
Dean Foods Co (NYSE:DF) also projected an adjusted profit of 5-15 cents per share for the fourth quarter of 2014.
Statement from Dean Foods CEO
“We don’t expect much relief on raw milk costs until early 2015, but we do expect significant butterfat cost declines at the end of the fourth quarter,” Chief Executive Gregg Tanner noted in a statement released Monday.
The company has been blaming volatile milk prices and higher costs for butterfat, a key ingredient in products such as ice creams and cottage cheese. The average cost of raw milk rose about 24% in the third quarter ending September 30.
Cost-cutting measures taking effect
The company also noted that it expected a reduction in production and distribution costs due to the 12 recent plant closures and other cost-cutting measures.
“The company’s cost reduction efforts are finally starting to show up in results,” Key Banc Capital Markets analyst Akshay Jagdale commented in a note to investors.
Dallas-based Dean Foods Co (NYSE:DF) has been striving to reduce costs by closing facilities and cutting jobs. The firm withdrew its full-year profit forecast back in August, after slashing it in May.