Top U.S. dairy company Dean Foods Co (DF.N) said it expects its milk volumes to be below the industry average in 2013, adding to concerns that it is too exposed to a business with shrinking market, volatile costs and intense price competition.
Shares of Dean Foods, which spun off its WhiteWave (WWAV.N) organic milk unit in October and sold its Morningstar dairy product division in December, fell 10 percent in heavy trading.
"Dean's 2013 milk volume guidance suggests market share loss, partially resulting from lost private label business that indicates worsening, not improving, industry overcapacity," Janney Capital Markets analyst Jonathan Feeney said in a note.
Dallas-based Dean, known for its Meadow Gold, Land O' Lakes and namesake brands, said it lost business in the fourth quarter from a "significant" customer who opted to source milk from a rival with cheaper prices.
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