Land O’Lakes Increases First-Quarter Sales, But Challenging Economy Impacts Earnings

June 8, 2010 01:08 PM
 

Land O'Lakes, Inc. increased its sales for the first quarter of 2010 by some $120 million over year-earlier levels, the national food and agricultural cooperative announced June 7.

 

More than half of the company's business portfolio delivered stronger sales, Land O'Lakes said. The Minnesota-based company said it also continued to reduce debt and strengthen its financial position, while managing through a difficult economy that affected first-quarter earnings.

 

 Sales Increase in Most Divisions: Net sales for the quarter increased to $3.07 billion, compared with $2.95 billion in the same period last year. This $120 million increase was led by the Dairy Foods business, with particularly strong results from the company's flagship branded butter.  Dairy Foods' "improved performance reflects strong and improved margins on the Retail Foods side of the business, despite a decline in overall volume from one year ago,” Land O'Lakes said.

 

Land O'Lakes reported that it reduced losses in its Industrial (processing) Foods side of the business versus the prior year. The division continues to be challenged by soft commodity markets and economic stress among dairy producers, particularly in the Eastern and Western milk procurement regions, where a reduced volume of milk was available for processing. 

 

Sales rose in the company's Crop Inputs business. Land O'Lakes' shell eggs business also improved sales, with a significant volume increase in higher-value branded and specialty eggs. Increased sales in these businesses helped to offset a challenging environment in Feed and Industrial (processing) Foods, according to the company.

 

• Challenging Economy, Legal Settlement Impact Earnings:  Despite higher overall sales in the quarter, earnings continued to be affected by a challenging economy and generally soft commodity markets. Net earnings were $30.9 million in the first quarter of 2010, compared with $82.7 million for the same period in 2009 – a record-setting year for Land O'Lakes. A significant portion of the difference in earnings between the two quarters was due to a $25 million charge related to the settlement of a class action lawsuit brought against the company's MoArk subsidiary. MoArk entered into the settlement to avoid the expense and distraction of protracted litigation.

 

Land O'Lakes, Inc. (www.landolakesinc.com) has annual sales of $10 billion. It's the nation's second-largest cooperative and does business in all 50 states and more than 50 countries.

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