Top U.S. Milk Maker Replaces CEO After 87% Stock Slide in a Year
Dean Replaces CEO in Latest Blow for Beaten-Down Milk Maker
(Bloomberg) -- Dean Foods Co. is getting a new leader in its bid to navigate declining U.S. dairy demand that has fueled the worst performance among global food companies in the past year.
Eric Beringause, a food and beverage veteran who was chief executive officer of Gehl Foods LLC, will replace Ralph Scozzafava as CEO of Dallas-based Dean, according to a statement Friday.
Beringause was tapped to lead Dean’s “transformation” in an industry beset by falling milk consumption, razor thin margins and fierce competition, which has intensified further after key customer Walmart Inc. built its own milk-processing plant last year.
Under Scozzafava, who also resigned from his position on the board, the company’s shares have slumped 87% in the past year, the worst performance among global packaged food companies tracked by Bloomberg, and slipped below a $1 for the first time. Its bonds have tumbled to about 57 cents on the dollar, pushing up yields to 25%.
While the company has been looking to sell assets, Canadian dairy giant Saputo Inc. said in June it was “absolutely not” interested, underscoring that there’s little appetite in the market.
In May, Dean reported a wider-than-expected loss for a third straight quarter but said cash burn was likely to be over as the company adjusted to lower demand.
At the time, Scozzafava said the company has “been in conversations with folks” about strategic alternatives. But he also said “it’s possible we won’t do anything and execute the plan we have.”
On Friday, the shares climbed 4.2% to $1.25.
“We believe Eric is the right leader to drive the transformation of the business as the company continues to execute on its enterprise-wide cost productivity plan and its previously announced exploration of strategic alternatives,” Jim Turner, non-executive chairman of the Dean Foods board, said in the statement.
--With assistance from Pratish Narayanan.
To contact the reporter on this story: Millie Munshi in Denver at mmunshi@bloomberg.net
To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan
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