S&P: Dean Foods to negative

Standard & Poor's said that it revised the rating outlook on Dean Foods to negative from stable and affirmed its B+ corporate credit rating.

The outlook revision reflects the belief that the company's near-term operating performance may be pressured by rising input costs, resulting in potential pressure on its financial covenant cushion, S&P said.

The industry outlook for continued rising prices in the near-term for raw milk and other commodity inputs is likely to have a negative effect on the operating results of Dean Foods and other dairy processors if they are unable to effectively pass along these increased costs, the agency added.

The ratings on Dean Foods reflect the view that the company has a fair business risk profile, due to its exposure to U.S. dairy industry conditions, which include reduced demand and a shift by consumers away from higher margin branded milk sales in response to aggressive retailer price discounting of private-label milk, S&P said.

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