Farmer-owned food and agricultural cooperative Land O’Lakes achieved a positive business performance in 2001, completing significant strategic growth and developing market momentum in key areas, Land O’Lakes president and CEO Jack Gherty told delegates at the company’s 81st Annual Meeting yesterday [Wednesday].
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Financial and Operations Reports released at the meeting indicated that, for 2001, Land O’Lakes recorded US$6bn in sales, US$71m in net earnings and returned US$47m in cash to members in a challenging year shaped by ongoing market volatility, spiking energy costs and a late-year economic slump.
In remarks focusing on the 2001 results and strategic direction of Land O’Lakes core businesses, Gherty indicated the national food and agricultural cooperative’s emphasis would be on a combination of performance and growth.
“We’ve achieved competitive size and scale in Ag Services, and our focus for 2002 will be on performance,” he said. “In Dairy Foods, we will leverage the strength of the LAND O LAKES® brand to drive performance and serve as the springboard for necessary strategic growth particularly in our Value-Added businesses.”
Gherty highlighted recent growth initiatives on the Ag Services side of Land O’Lakes business, including the Agriliance joint venture in Agronomy and the Land O’Lakes Farmland Feed joint venture (both in 2000) and the October, 2001, acquisition of Purina Mills, Inc. These initiatives have given Land O’Lakes members ownership in North America’s number-one feed company and leading crop inputs marketing organisation.
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By GlobalDataGherty added that, while Land O’Lakes has number-one market shares in several key Dairy Foods product categories, the cooperative is still only the 21st largest food company and “You will see us bring the same passion to growing our Dairy Foods business as we have to Agronomy and Feed.”
Land O’Lakes also reported improved earnings in swine operations, largely the result of improved hog markets. Gherty added that, “The swine team, which produced just over US$3m in earnings, also delivered new value to members by finding ways to cut costs and reduce invested capital.”
Strategies for the future include growing the cooperative’s aligned swine system to meet the needs of local cooperatives and independent producers, and a continuing emphasis on increasing operating efficiency and reducing invested capital.
In Seed, 2001 accomplishments cited by Gherty included: strong volume growth; earnings of US$3.6m; and the increased strength and reach of the CROPLAN GENETICS® brand.
Land O’Lakes Seed strategies for the future include: helping local cooperatives grow their seed sales; further building the strength of the CROPLAN GENETICS brand; and leveraging the Seed operation’s relationship with Agriliance, Land O’Lakes Farmland Feed and CHS Cooperatives’ grain systems.
In Agronomy, Land O’Lakes reported approximately US$10m in earnings, despite very challenging conditions, including the impact of volatile natural gas prices, a continuing crop nutrients industry downcycle and the challenges of implementing the Agriliance joint venture.
Among the 2001 accomplishments were the establishment of singular, focused leadership and a unified customer- and performance-driven culture, and the development and implementation of a new, more efficient information system.
Gherty indicated the winning formula for Agriliance, going forward, will be: getting the basics right; effectively serving customers; and delivering on Agriliance’s performance potential.
Gherty said Land O’Lakes had a very positive year in Dairy Foods …delivering just over US$50m in earnings, despite volatile markets and softening in demand. Key accomplishments included: strong earnings in such areas as butter, deli cheese, dry cheese and food service products; significant supply-chain cost reductions; and progress in upgrading Land O’Lakes Upper Midwest infrastructure.
Looking ahead to 2002, Gherty called Land O’Lakes Dairy Foods strategies “straightforward and powerful”. Among the strategic initiatives he outlined were: a continued focus on improving supply-chain efficiency; bringing a new state-of-the-art JV (with Mitsui of Japan) cheese and whey facility in California on-line; continuing to upgrade the cooperative’s Upper Midwest dairy infrastructure; and brand-driven growth in Dairy Foods Value-Added businesses.
Gherty placed special emphasis on the Dairy Foods growth strategy, indicating Land O’Lakes is soon to launch an aggressive campaign focusing on a repositioned and re-energized LAND O LAKES brand. The campaign, based on extensive market research, will enable Land O’Lakes to add strength to its brand and additional value to member production, and will also help drive he company’s Dairy Foods growth initiatives, Gherty said.
Those growth initiatives will include aggressive efforts to build sales and market share in existing branded product lines; the development of new, market-focused, branded, value-added products; and the exploration of external growth opportunities.
