To: Smiling Bob who wrote (11879 ) 10/2/2007 3:42:18 PM From: Smiling Bob Respond to of 19256 Dean Foods selling less organic food due to inflation conscious consumer There seems to be a very close connection with WFMI, yet, like magic, it's up again AP Dean Foods Cuts 3Q, 2007 Profit Outlook Tuesday October 2, 10:15 am ET Dean Foods Cuts 3Q, 2007 Earnings Outlook Due to High Dairy Commodity Costs, Will Cut Workers DALLAS (AP) -- Milk producer Dean Foods Co. on Tuesday lowered its profit expectations for the third quarter and 2007, citing record-high dairy commodity costs, and said it plans to cut 600 to 700 jobs. The news sent the company's shares down $1.49, or 5.7 percent, to $24.80 in morning trading. Dean Foods now expects earnings per share of about 15 cents for the third quarter and about $1.25 for the full year. The company previously had expected earnings between 24 cents and 28 cents per share in the third quarter. Dean Foods cautioned in August it might only be able to hit the low end of its 2007 earnings guidance of $1.52 per share to $1.58 per share for the year because of the high dairy costs. The new guidance is well below Wall Street expectations. Analysts polled by Thomson Financial expect earnings per share of 26 cents for the third quarter and $1.46 for the full year. "Rapidly increasing and record high dairy commodity costs have created a very challenging operating environment and 2007 results have been well short of our expectations," said Chairman and Chief Executive Gregg Engles, adding "this is by far the most difficult operating environment in the history of the company." Dean Foods blamed the higher milk costs partly on strong export demand for nonfat dry milk powder. The company said with higher costs being reflected in retail prices at stores, sales have softened. Crossover to private-label brands from branded labels has also affected sales, the company said. Dean Foods, which also operates an organic division that produces Horizon Organic milk, said it has also been affected by an oversupply of organic milk. Retail prices of organic milk have been dropping due to a glut in the market. The oversupply is mainly a result of dairy farmers rushing to convert their farms to meet organic regulations before a rule went into effect in June that made that process more stringent. Dean Foods also said it would cut about 600 to 700 positions as part of its effort to "streamline operations." The company said it expects to take a restructuring charge in the third quarter related to the staff reductions.