US: Land O'Lakes earnings growth propelled by dairy gains
Land O'Lakes benefits from higher retail volumes
US farmer-owned co-operative Land O'Lakes has booked a jump in full-year earnings, boosted by higher sales and margins at its dairy business.
The company said yesterday (25 February) group net earnings rose to US$306m, up 27% year-on-year. 2013 also saw "record annual sales", which increased 4.4% in the 12 months to $14.2bn.
Gains were driven by a surge in profits at the group's dairy business. Pre-tax earnings at the unit were up 101% to $75m on improved margins on milk powder and butter and higher retail volumes. Sales rose 8%, Land O'Lakes added.
The food-to-agriculture group added it saw a "strong" performance from its WinField Solutions crop input unit. Sales were up at its animal feed division but profits declined in the period.
President and CEO Chris Policinski said: "The record-setting year in dairy foods, combined with the continued strong performance of WinField, exemplify our commitment to delivering the products, programs and services that provide the greatest value for our customers and members alike."
Land O'Lakes, Inc. Reports Record Annual Sales and Net Earnings
2/25/2014 12:00 AM
Record Year Includes 30 Percent Increase in Cash to Members
MINNEAPOLIS, Feb. 25, 2014 – Land O’Lakes, Inc., today announced record annual sales of $14.2 billion, up 4.4 percent from the prior year, and record net earnings of almost $306 million, a 27 percent increase over the prior year. The strong 2013 results continue a trend of significant growth during which the farmer-owned, Fortune 200 food and agriculture cooperative has more than doubled annual sales and grown net earnings by more than 330 percent over the last seven years.
“Our strong 2013 performance builds on our success of the last seven years,” said Land O’Lakes, Inc., President and CEO Chris Policinski. “The record-setting year in Dairy Foods, combined with the continued strong performance of WinField, exemplify our commitment to delivering the products, programs and services that provide the greatest value for our customers and members alike.”
Overall results for 2013 also included a record return of $147 million to members, representing a 30 percent increase in patronage compared to 2012. This is the fifth consecutive year cash to members has exceeded $100 million, bringing the seven-year total to more than $750 million.
A number of strong performances across Land O’Lakes’ core businesses drove the favorable year-end results including:
• Dairy Foods – 101 percent year-over-year growth in pretax earnings,
• Crop Inputs – Greater than $200 million in pretax earnings for second consecutive year and
• Feed – 12 percent annual sales growth in Companion Animal and $25 million annual sales increase in Lifestyle Feed compared to 2012
For the quarter ending December 31, 2013, Land O'Lakes delivered net earnings of $108 million, a 19 percent increase compared to Q4 2012. Fourth quarter pretax earnings were driven by a 306 percent increase in Feed, and a 421 percent increase in Layers compared to Q4 2012.
“Our strategic direction is clear: Deliver strong financial performance while continuing to enhance our capabilities for future growth,” Policinski said. “We will continue to make strategic investments in our core businesses – from agriculture to animal nutrition to the dairy case.”
Land O'Lakes, Inc. Businesses
Dairy Foods generated record pretax earnings of $75 million on sales of $4.5 billion, up 8 percent from 2012. This year’s results, Dairy Foods’ highest earnings ever, were driven by improved margins on milk powders and butter in Global Dairy Ingredients along with records in sales volume and earnings in our Retail Foods and Foodservice businesses.
Demonstrating continued success in the agriculture market, Crop Inputs, operated through WinField Solutions, delivered $218 million in pretax earnings on sales of $4.76 billion. The performance in Crop Inputs is a direct result of strategic decisions to focus on key business segments with strong margins such as herbicides, insecticides and fungicides; seed treatments, adjuvants, micronutrients and plant growth regulators; and corn and alfalfa seed.
Feed, operated through the Purina Animal Nutrition business, delivered $18 million in pretax earnings on sales of $4.77 billion, a 5 percent increase over 2012. While unfavorable commodity markets and trading results resulted in a decline in year-over-years pretax earnings, Purina’s overall volumes in the Lifestyle business increased, including strong advances in the Companion Animal business.
Layers, run by the Company’s subsidiary, Moark, LLC, recorded sales of $259 million. Pretax losses of $25 million in 2013 represent a $14 million year-over-year performance improvement compared to 2012. While challenges related to supply issues and high feed prices relative to egg prices impacted our Layers business, an extensive focus on cost savings and improved operational efficiency drove the financial improvements in 2013.
Original source: Land O'Lakes
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