Some insiders felt Dean would fall very short on first quarter earning. Instead, they pulled a rabbit out of the hat:
http://www.prnewswire.com/news-releases/dean-foods-reports-first-quarter-2011-results-121555323.html
In the first half hour of trading today Dean shares were up over 14%. At the closing bell Dean shares were up 11.48%.
Oddly enough, Dean saw sales volume for fluid drop and the Class I mover rise dramatically when compared with the first quarter of 2010. Greg Engles said on the conference call he expected farm milk price to remain steady for the rest of the year. But, what does he know?
As Yogi Berra once said, "It's tough to make predictions, especially about the future."
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The rabbit that Dean pulled out of their hat appears to be the gutting of certain employee ranks: "Reducing selling, general and administrative (SG&A) expense is an area of focus for the Company in 2011. Management now expects to more than double its previous target of a $30 million reduction in the Company’s SG&A expense run-rate from 2010 levels by year end. As part of this effort, the Company eliminated 140 positions in these areas early in the second quarter."
ReplyDeleteThat is often a typical corporate response to boost earnings in the short term. Once that well runs dry they will then focus on lowering other costs - MILK.
The "corporate powers" in the dairy processing industry don't want Dean to fail so the farmgate price of milk will just need to be lower later in the year! :)
It's that simple! (please excuse the sarcasm)
Bruce