Tuesday, 12 June 2007

Dean Foods Company Lowers 2007 Guidance

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Tuesday, 12 June 2007

Challenges across the Portfolio Driven by Anticipated Record High Dairy

Commodity Prices and Continued Oversupply in the Organic Dairy Markets

DALLAS, June 12 /PRNewswire-FirstCall/ — In conjunction with the
Company’s presentation at an investor conference in Paris today, Dean Foods
Company (NYSE: DF) lowered expectations for adjusted earnings in 2007.

“We are faced with an unusually broad set of challenges across the
portfolio,” said Gregg Engles, Chairman and CEO. “First, conventional milk
prices have risen rapidly and forecasts for the back half of the year have
increased significantly as foreign and domestic market forces have combined to
put significant pressure on the U.S. dairy industry. As a result, it has
become increasingly likely that conventional raw milk prices will reach all-
time highs by the third quarter. We expect this steep rise in dairy costs to
put pressure on Dairy Group profit growth, especially in the second and third

“Second, as we’ve mentioned before, our Horizon Organic brand is facing a
significant near-term industry-wide oversupply of raw organic milk. This
oversupply is largely due to a change in the regulations governing the organic
transition and certification process that caused many farmers to enter the
one-year transition process prior to the new regulation taking effect in June
2006. The resulting oversupply of milk is creating a considerable disruption
in the organic milk market as competitors compete aggressively to expand sales
and distribution. Our WhiteWave team is responding with an aggressive program
to protect Horizon Organic’s leadership position through this period. This
program includes lowering prices in response to competitor actions, pursuing
expanded distribution, increasing our advertising support and continuing to
drive innovation to maximize the long-term potential of the brand. We expect
these investments to negatively impact near-term profitability.”

“Based on these unprecedented challenges across the Dean Foods portfolio,
we have reduced our full year expectations for adjusted earnings to
approximately $1.52 to $1.58 per share. For the second quarter, we are
reducing our earnings expectations to $0.30 to $0.31 per share, largely due to
Dairy Group performance. We expect the third quarter to be particularly
challenging as we face steep month-over-month increases in conventional raw
milk costs, with an improvement in trend in the fourth quarter. We expect to
provide an update in early August on our second quarter earnings conference

Engles concluded, “While 2007 will be behind our financial expectations,
our multiple-year transformation program to reduce costs and build capability
in marketing, innovation and sales continues to move forward. As we look ahead
to 2008, I expect our profit growth to accelerate based on the progress we are
making in building the New Dean Foods, and as the short-term challenges across
the portfolio moderate.”


Today’s conference presentation is available via webcast from the
Company’s website. The presentation will be held at 11:15 a.m. local time
(5:15 a.m. EDT) in Paris today and may be heard live by visiting the
“Webcasts” section of the Company site at http://www.deanfoods.com. A replay
of the presentation will also be available at the Company’s website.


Dean Foods Company is one of the leading food and beverage companies in
the United States. Its Dairy Group division is the largest processor and
distributor of milk and other dairy products in the country, with products
sold under more than 50 familiar local and regional brands and a wide array of
private labels. The Company’s WhiteWave Foods subsidiary markets and sells a
variety of well-known dairy and dairy-related products, such as Silk(R)
soymilk, Horizon Organic(R) milk and other dairy products and International
Delight(R) coffee creamers. WhiteWave Foods’ Rachel’s Organic(R) brand is the
largest organic milk brand and third largest organic yogurt brand in the
United Kingdom.


Some of the statements in this press release are “forward-looking” and are
made pursuant to the safe harbor provision of the Securities Litigation Reform
Act of 1995. These “forward-looking” statements include statements relating
to, among other things, current and expected organic milk supply, conventional
milk costs, projected sales, operating income, net income and earnings per
share. These statements involve risks and uncertainties that may cause results
to differ materially from the statements set forth in this press release. The
Company’s ability to meet targeted financial and operating results, including
targeted sales, operating income, net income and earnings per share depends on
a variety of economic, competitive and governmental factors, including organic
milk supply, conventional milk prices and other raw material availability and
costs, the demand for the company’s products, many of which are beyond the
Company’s control and which are described in the Company’s filings with the
Securities and Exchange Commission. The Company’s ability to profit from its
branding initiatives depends on a number of factors including consumer
acceptance of the Company’s products. The forward-looking statements in this
press release speak only as of the date of this release. The Company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to such statements to reflect any change in its expectations with
regard thereto or any changes in the events, conditions or circumstances on
which any such statement is based.

SOURCE Dean Foods Company

CONTACT: investors, Barry Sievert, Investor Relations, +1-214-303-3437,
or media, Marguerite Copel, Corporate Communications, +1-214-721-1273, both of
Dean Foods Company
Web site: http://www.deanfoods.com

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