Dean Foods reports Q3 net loss

American dairy company Dean Foods has reported a loss in its third quarter of 2011 despite increased sales, mostly due to impairment charges at its Fresh Dairy Direct business.

Net loss for the quarter was $1.5bn, compared with a net profit of $24m in 2010.

The quarterly results included a non-cash goodwill impairment charge of $1.6bn, which was levied after an analysis found that the fair value of the Fresh Dairy Direct unit was lower than its carrying value.

Net sales rose 9% to $3.4bn, compared with $3.1bn in the previous year, and the growth was attributed to pass-through of higher costs of dairy and overall commodities at Fresh Dairy Direct-Morningstar, and increased sales at WhiteWave-Alpro.

Fresh Dairy Direct-Morningstar net sales grew 12% to $2.9bn, while WhiteWave-Alpro segment posted net sales of $531m, a 11% increase.

Dean Foods chairman and CEO Gregg Engles said that, looking ahead, recent trends are set to continue, and the Fresh Dairy Direct-Morningstar will continue to face a difficult volume and pricing environment.

"However, results should benefit from our continued focus on cost reduction across the business, moderating dairy and other commodity costs, and typical fourth quarter seasonality that has a beneficial mix component," Engles added.

Dean Foods operates through two segments: Fresh Dairy Direct-Morningstar, which is a leading US processor and distributor of milk, creamers, and cultured dairy products; and WhiteWave-Alpro, which produces an array of branded dairy, soya, and plant-based beverages and foods.