US dairy firm Land O’Lakes has recorded an increase in annual profits despite mixed results from its dairy foods division, which booked “record” sales but lower earnings.
For the 12 months to the end of December, net earnings totalled US$182.2m, a 2.3% improvement on 2010. The figure, however, was impacted by $14.7m in unrealised hedging losses, which the company said yesterday (23 February) was more an indicator of market conditions at a given time than of performance. Operating profit climbed 7% to $209.3m.
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Net sales, which includes contributions from Land O’Lakes, crop, feed and egg operations, amounted to $12.85bn, up 15% on the year. The results include “record revenues” in the company’s dairy foods, feed and crop inputs businesses.
In Land O’Lakes dairy foods business, sales grew 17% to $4.3bn despite a 6% fall in retail volumes. Sales volumes to foodservice customers increased 8% and ingredients volumes rose 1%.
Pre-tax earnings, however, slid 44% to $28.1m for the year, reflecting the impact of “an uncertain general economy and late-year volatility in dairy markets”. The dairy foods unit also incurred $6.5m of the hedging losses. A year earlier, it enjoyed a hedging gain of $4.2m.
“Our 2011 results reflect strong performance in a challenging economy and volatile marketplace,” said Land O’Lakes president and CEO Chris Policinski. “These results also continue a trend of strong performance. These positive results were driven by the strength of Land O’Lakes’ brands; solid performance by innovative new products; a continued focus on operating efficiency and risk management; and the disciplined pursuit of strategic growth initiatives.”
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