(Bloomberg) -- Dean Foods Co. is replacing its chief executive officer in the latest sign of troubled times for the biggest U.S. milk processor, which recently traded at less than $1.
Eric Beringause was named president and CEO to succeed Ralph Scozzafava, who has stepped down, according to a statement Friday. Beringause, who was CEO of Gehl Foods LLC, was tapped to lead Dean’s “transformation.”
- Dallas-based Dean has been the victim of Americans’ declining demand for milk. Making things worse, margins are razor thin, competition has grown fierce and key customer Walmart Inc. built its own milk-processing plant last year.
- While the company has been looking to sell assets, Canadian dairy giant Saputo Inc. said in June it was “absolutely not” interested in buying Dean assets, 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,” Scozzafava told analysts on a call.
- Investors may be wondering whether the new CEO will be charged with shaking things up ahead of a sale or transforming the company back to long-term profitability.
- The shares climbed about 4% to $1.30 in after-market trading. They closed on Friday at $1.25, down 67% this year.
- “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.
- America’s Biggest Milk Processor Is Trading Under a Buck
- Dean Foods Bonds Get Boost After Co. Raises Borrowing Base
To contact the reporter on this story: Millie Munshi in Denver at email@example.com
To contact the editors responsible for this story: James Attwood at firstname.lastname@example.org, Millie Munshi
©2019 Bloomberg L.P.