Dean Foods Co.'s (DF) third-quarter earnings dropped 51%, falling short of analysts' estimates, as the company continued to see its dairy operations--its biggest unit--struggle.
Shares recently tumbled 12% to $9.12 premarket as the company also forecast fourth-quarter earnings of 13 cents to 18 cents a share. Analysts surveyed by Thomson Reuters expected 27 cents.
"These results are clearly disappointing for us and reflect continued significant challenges in our largest business, Fresh Dairy Direct-Morningstar," said Chairman and Chief Executive Gregg Engles. "In addition to ongoing adverse conditions in the conventional milk business, weak consumer spending led to soft volumes in conventional fluid milk and other beverage and cultured products."
Engles also noted that results were also hurt by "much higher-than-anticipated" butterfat costs.
The biggest U.S. dairy processor and distributor by revenue has seen its bottom line drop as consumers have continued to turn to less expensive milk rather than Dean's branded offerings. The company has seen particular weakness in the dairy segment. As such, Dean Foods' stock through Monday was down about 43% this year.
It reported a third-quarter profit of $24.3 million, or 13 cents a share, down from $49.7 million, or 27 cents a share, a year earlier, which included 6 cents of charges.
Revenue jumped to $3.1 billion from $2.8 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 21 cents a share on $3.04 billion in revenue.
Gross margin fell to 24.5% from 28.4% on higher commodity costs.
The dairy segment saw profit drop by one-third as revenue increased 11% due to the pass-through of increased costs to customers.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; firstname.lastname@example.org