Dean Foods Co., the largest U.S. milk processor, gained the most in more than two years in New York trading after raising its full-year earnings forecast and posting first-quarter profit that exceeded analysts’ estimates.
Full-year earnings will be 67 to 75 cents, up from a previous prediction of 55 to 65 cents, the Dallas-based company said today in a statement. First-quarter net income fell 41 percent to $25.3 million, or 14 cents a share, from $43.2 million, or 24 cents a year earlier. That beat the 6-cent average estimate of 15 analysts in a Bloomberg survey. Sales increased 3 percent to $3.05 billion from $2.96 billion.
Dean’s Fresh Dairy Direct-Morningstar dairy business’s earnings have declined after commodity costs rose, retailers pressed for price concessions and consumers bought cheaper store brands. Dean said today it’s cutting costs and pursuing new business to offset the “soft” volumes in the milk unit.
“Overall, the business is off to a stronger start than we had anticipated and we are somewhat encouraged as we look to the balance of the year,” Dean Chairman and Chief Executive Officer Gregg Engles said in the statement. “While we have a long way to go at Fresh Dairy Direct-Morningstar, I am cautiously optimistic that the trajectory of our business is upward.”
Dean climbed $1.36, or 12 percent, to $12.34 as of 9:48 a.m. in New York Stock Exchange composite trading. The shares earlier gained as much as 15 percent, the biggest intraday gain since Nov. 24, 2008.
Second-quarter earnings will be 15 to 20 cents a share, the company also said.
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