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Dean Foods profits drop because of weak demand for milk
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Dean Foods profits drop because of weak demand for milk

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Shares in Dean Foods, one of the largest milk processors in the US, fell by 8.6% yesterday as first quarter profits came in way below analysts’ estimates.
Shares in Dean Foods, one of the largest milk processors in the US, fell by 8.6% yesterday as first quarter profits came in way below analysts’ estimates.

Shares fell due to weak demand for milk coupled with higher investment in joint venture organic milk business.

Last November, Dean Foods formed a joint venture with America’s largest cooperative of organic dairy farmers, CROPP to process and supply organic milk in an effort to achieve new growth.

Milk consumption in the US has been declining due to high prices and shifting consumer preferences towards lower-fat alternatives including juices and vitamin water.

Reducing capital expenditure spend

Dean Foods plan to spend less on capital expenditure this year.

Its capital budget of $120-$130m (€112.8-€122.8m) for 2017 is down from $145m (€136.3m) in 2016.

With net sales of $2.02bn (€1.8998bn) showing no growth for the eight consecutive quarter shares in the company were trading at $18.79 (€17.66) on the New York Stock Exchange on Thursday.

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