That still doesn’t take the sting away from Dean’s 2007 performance. Although net sales rose 17.1 percent to $11.8 billion, Dean reported full-year declines in diluted earnings per share, which dropped to $0.95 from $2.12 in 2006; and net income, which slipped to $164.5 million from $295.7 million.
Commenting in the company’s recent fourth-quarter and year-end financial report, Chairman and Chief Executive Officer Gregg Engles noted, “2007 was the most challenging year in the history of Dean. We were faced with steeply rising and record high dairy commodity costs in our Dairy Group operations. At the same time, WhiteWave Foods was challenged by a severe oversupply of organic milk that drove down realized prices and increased competitive intensity in the industry.
“However, while 2007 was a difficult year operationally, these near-term challenges did not slow our progress toward transforming the company into a stronger long-term competitor. In 2007, we laid much of the groundwork that we will build on as we transform the business to drive productivity and increase efficiency for years to come.”
Dean noted that declines in full-year adjusted net income and diluted earnings per share were partly attributable to a 64.3 percent increase in interest expense related to recapitalization and a special cash dividend of $15 per share paid out last April.
Dean said its Dairy Group registered an 18.2 percent increase in annual sales - reaching $10.4 billion - attributed to the pass-on of higher dairy commodity costs. Meanwhile, operating income fell 8.8 percent to $624.5 million because of those same costs, as well as shrink, lower proceeds from excess cream sales and a consumer shift toward private label.
Dean’s WhiteWave business increased its sales by 9.2 percent to $1.4 billion during the year. Specifically, the unit’s Horizon Organic, Silk, Land O’Lakes and International Delight brands all posted gains. Collectively, however, the group saw its operating income drop by 11 percent due to increased promotional expense (Horizon) and what Dean noted as higher infrastructure and distribution costs.
“Turning to the outlook for 2008, it’s clear that our results will continue to be driven primarily by swings in dairy commodity costs, including the organic milk market,” Engles concluded. “In 2007, we learned how difficult it is to forecast these markets, given the impact of global dairy demand swings and a highly challenged organic milk supply chain.”
For The Record
Jan. ’08 - Dean promotes Harrald Kroeker to president of Dean’s Direct Store Delivery Group. Dean promotes Michelle Goolsby to a new post as executive vice president for Development, Sustainability and Corporate Affairs. Dean promotes Greg McKelvey to a new post as senior vice president for Strategy and Marketing Services.Sept. ’07 - Alan Bernon steps down as Dairy Group president but remains on Dean’s board of directors. Gregg Engles, Dean chairman and chief executive officer assumes responsibility for Dairy Group activities. Dean hires Rick Zuroweste as Dairy Group chief marketing officer.
April ’07 - Dean hires Rachel Cullen as senior vice president and chief operating officer for Ice Cream (a new post). Dean also hires Debbie Carosella as senior vice president for innovation at Dean’s Dairy Group and WhiteWave Foods division.
