The Cow in the Coal Mine

Dean Foods Co., the biggest U.S. dairy processor, posted third-quarter earnings that missed analysts’ estimates as higher butterfat costs cut profitability. The company also said its chief financial officer will resign.

Net income dropped 51 percent to $24.3 million, or 13 cents a share, from $49.7 million, or 27 cents, a year earlier, the Dallas-based company said today in a statement. That lagged the average estimate for per-share profit of 21 cents from 14 analysts surveyed by Bloomberg. The shares plunged in early New York trading.

My pal Barbarian Capital notes that the company saw its EBIT margin drop by 40% in Q3 vs. Q3 last year: 3% vs. 5%.  As someone who knows this industry cold, it’s not encouraging to hear him say “Thanks for playing and welcome to QE2 wonderland.”

Sara Lee ($SLE) is another packaged foods company under siege by agflation.  Here’s the latest from Sara (via ABC News):

Sara Lee Corp reported a lower-than-expected quarterly profit due to higher commodity costs and other spending and said it would sell its North American bakery business to Mexico’s Grupo Bimbo for $959 million.

Cheap dollars are an absolute blast for those in the risk assets game.  For anyone with serious raw materials costs, however?  No so much.

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The Agflation Chronicles (TRB)