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Dean Foods reports lower milk sales, market share

Dean Foods reports lower milk sales, market share
Dean Foods Company reported third quarter 2013 net sales of $2.2 billion, compared to $2.2 billion of net sales in the third quarter of 2012.
Operating income totaled $23 million, compared to $108 million in the same quarter a year ago. Net income attributable to Dean Foods totaled $415 million for the third quarter of 2013. On an adjusted basis, third quarter net income attributable to Dean Foods totaled $11 million.
Dean Foods' share of U.S. fluid milk sales volume declined to 34.9% during the third quarter, down from 36.4% in the second quarter of 2013.
Due to the previously disclosed loss of business at a large retailer, Dean Foods' unadjusted fluid milk volumes declined 10% on a year-over-year basis. Excluding that loss and another customer's decision to vertically integrate its dairy operations last year, Dean Foods' milk volumes declined 1.7% in the quarter. (Industry fluid milk volumes declined approximately 1.7% year-over-year in the third quarter on an unadjusted basis, based on USDA data and company estimates.) Total volumes across all products declined 8% to 685 million gallons.
Dean continues to target $120 million of cost savings in 2013, including the planned closure of 8-12 (10-15%) of its manufacturing facilities by mid-2014. The company has closed or announced the closure of eight plants since its accelerated cost reduction initiative began in the fourth quarter of 2012. As of the end of the third quarter, seven of the announced closures have ceased operations.
The third quarter 2013 average Class I Mover, a measure of raw milk costs, was $18.98/cwt., an increase of 15% from the third quarter of 2012, and 5% above the second quarter 2013 level.