The pass-through of higher average commodity costs and volume growth resulted in fresh dairy direct net sales of $2.3 billion, a 4 percent increase from $2.2 billion in net sales for the first quarter of 2011. The first quarter 2012 average Class I Mover, a measure of raw milk costs, was $17.38 per hundred-weight, an increase of 6 percent over the first quarter of 2011, but a decrease of 8 percent from the fourth quarter of 2011.
First quarter fresh dairy direct operating income was $101 million, an 18 percent increase from the $86 million in the first quarter of 2011.
First quarter Morningstar volumes were essentially flat, reflecting strong core volume sales across both retail and foodservice channels, offset by the impact of the April 2011 divestiture of its yogurt business. Excluding the impact of the divestiture, first quarter 2012 Morningstar volume increased 16 percent from the first quarter of 2011, reflecting the company's continued success in partnering with winning customers to drive growth. Volumes were also supported by warmer weather, which helped drive ice cream mix sales.
Core volume growth and a more favorable commodity environment drove Morningstar net sales of $325 million, a 5 percent increase over the prior year first quarter, despite the April 2011 divestiture of its yogurt business. Morningstar operating income increased 13 percent in the first quarter to $29 million, from $25 million in the first quarter of 2011.
"Given our significant momentum in the first quarter, the cautious optimism that we expressed last quarter has turned less cautious," continued Engles. "All three operating segments performed well in the first quarter, and we expect strong full year growth across the business.
"At WhiteWave-Alpro, first quarter top-line growth accelerated behind strength in our core products as well as strong early consumer interest in our new product introductions. Looking ahead, we expect continued solid top and bottom-line growth. Our Dallas plant start-up costs and marketing spend in support of new product launches will increase in the second quarter from the first quarter. Given the first quarter's strong performance, however, we now expect full-year WhiteWave-Alpro operating income growth to be in the high-teens.
"Fresh dairy direct (FDD) continued to outperform the industry from a volume perspective. This, combined with price realization and cost reductions, resulted in strong first quarter profit growth for FDD. Looking ahead, we will continue to focus on the fundamentals of the business: volume, price realization, and cost reduction. With our outlook for a relatively more stable commodity environment through 2012, we expect continued strong growth for the second quarter and the full year. For the full year, we expect low-teens operating income growth for fresh dairy direct.
"Morningstar's balanced business across foodservice and retail also produced solid first quarter results as we continue to partner with winning customers. Given Morningstar's strong start, we expect full year operating income growth in the mid-teens.
"In light of our more favorable operating outlook, our expectations for continued SG&A savings, and lower interest expense over the balance of the year, we expect second quarter adjusted earnings per share of $0.28- $0.33. We are also increasing our full year guidance to a range of $1.10-$1.20 in adjusted earnings per share."