Dean Foods Tops Estimates on Profit

Dean Foods Co, the largest dairy processor in the U.S. posted profit for the third quarter and forecast its earnings for the fourth quarter with both topping estimates made by analysts as it has benefitted from a drop in the cost of raw milk,

Earnings that excluded certain one-off items reached 30 cents, the company, based in Dallas said on Monday in a statement. Analysts were expecting earnings to be 24 cents per share.

Earnings for the ongoing quarter special items will by between 28 cents and 38 cents per share said the company, which is more than the 24 cents per share analysts have forecasted.

Shares were up 7.3% in New York on Tuesday morning marking the biggest gain of the year.

Milk prices have come under heavy pressure around the world in 2015 amidst a glut in supply. Class I Mover, a raw milk measure costs on average were $16.38 per every hundred-weight during the period, which was 30% lower than the same period one year ago.

One analyst said that Dean Foods had a quarterly performance that was much better than had been expected and strong guidance for the fourth quarter highlighted the favorable diary environment, as well as the increased benefits from initiatives taken internally including cost savings and better focus on its DairyPure brand.

Dean during a conference call with Wall Street analysts said it had projected annual sales of $2.5 billion for the DairyPure brand of milk, which has not artificial growth hormones and went on sale for the first time this past May.

The food service industry might help boost sales to more than $4 billion, said Dean.

DairyPure was first introduced to fill a big void across the industry dominated by the regional brands and to counter the growth of organic as well as soy, or almond based substitutes,

The new brand was able to take 9.6% of the market in just a period of four weeks through October 4, helping to possibly reducing the private label milk share to just 47.4% from last year’s 501.%.

Net income for the third quarter reached 22 cents per share, compared to the net loss last year during the same period of 17 cents per share.

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