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Dean Foods closes California milk plant

Tuesday, May 14, 2013

A fluid milk plant in Buena Park, Calif., is the next on the list of closures for the Texas-based Dean Foods.

News of the closure came during the company's first quarter earnings report last week, when CEO Gregg Tanner confirmed that Dean Foods would be focusing on an efforts to cut costs for the next 18 months.

Tanner re-stated the plan to shut down 10-15 percent of its fresh dairy plants and eliminate a "significant number" of distribution routes by the end of 2014.

Dean Foods owns about 79 fresh dairy plants across the U.S., including Le Mars' milk plant.

Employees at the Buena Park, Calif., plant were "recently notified" of its upcoming closure, Tanner said.

Earlier this year, Dean Foods management announced its Shreveport, La., milk plant would be shut down as part of expense-cutting efforts, and Tanner said it is now closed.

"We have strong momentum and expect to announce additional plant closures over the balance of the year and into 2014," Tanner said.

Company officials are not sharing whether or not the closures will affect the Le Mars plant, but they have said if any decision was made about a plant, employees would know first.

During the earnings report conference call, Tanner noted that the cuts are part of an effort help the company adapt to the recent loss of a portion milk of business with a "significant" retailer.

Dean Foods' "private label white milk volumes are expected to underperform the industry this year" due to that loss of contract, he said.

When questioned, Tanner confirmed that closing each plant could save the company an estimated $3-4 million in overhead costs, depending on the plant's size.

Trimming company expenses was a major focus of the earnings report.

The company cut $23 million out of its selling, general and administrative costs and $17 million in distribution expenses since one year ago, Tanner said.

"We are accelerating our cost-reduction efforts," Tanner said. "We are confident the momentum behind our cost-reduction activities will deliver solid bottom-line results."

The company is seeking to drive down its debt, the CEO said.

"Over the past 12 months, we have reduced Dean Foods net debt by over $2.6 billion," he added.

Dean Foods recently moved forward with a spinoff of its WhiteWave Foods portion, which makes products including Silk soymilk.

The company earlier sold its Morningstar Foods portion, which makes items such as dairy and non-dairy creamers.

Tanner highlighted the success of one of Dean Foods' newer brands, the lower-sugar TruMoo chocolate milk.

TruMoo is three times larger than the next largest flavored milk brand, Tanner said.

"We ... expect the brand to continue to grow in the years ahead," he added.

Le Mars' plant is one of the Dean Foods' plants which produces TruMoo.

Tanner shared optimism as he wrapped up the earnings report.

Dean Foods management "expects" the company will "deliver strong second-quarter and full-year results," Tanner said.

He thanked Dean Foods' employees "for their hard work in delivering the first quarter and the groundwork they are putting in place to produce solid full-year results."

Dean Foods employs about 280 people in Le Mars and around 18,800 in its fresh dairy business nationwide.

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