Land O'Lakes, Inc. Reports Strong Net Earnings And Sales For 2010

March 3, 2011
Land O'Lakes, Inc. Reports Strong Net Earnings And Sales For 2010

Land O'Lakes, Inc. released its 2010 financial results, which included the company's second-highest net earnings and sales, as well as record-high cash returned to members.  

Net earnings were $178 million, down from 2009's $209 million, but the second-highest in Land O'Lakes history.

Net sales were $11.1 billion, up from $10.4 billion in 2009 and the company's second-highest net sales ever; and Record-high cash was returned to members of $125 million.

Strong fourth-quarter performance contributed to the solid full-year results. For the quarter, net sales were $2.8 billion, up from $2.5 billion for the same quarter in 2009; while net earnings were $74.6 million, compared to $49.3 million one year ago.

Commenting on 2010 results, Chris Policinski, Land O'Lakes president and chief executive officer, said in a prepared statement: "The economy created a challenging environment for all our businesses. We took action to strengthen our capabilities and competitiveness, which helped Land O'Lakes manage through these difficult marketplace conditions. As a result of our intensified focus – and the contributions of our 9,000 employees – we delivered strong financial results for our members."

Policinski highlighted the record-high cash returned to members in 2010. "The economic downturn has created financial stress for many of our members. So it's particularly important that we maintained strong performance and delivered record-high returns. This reflects our commitment to serve our members by delivering substantial value."

Policinski pointed to several factors that drove performance in 2010 – the strength of Land O'Lakes brands; solid performance by new, innovative products; a continued focus on operating efficiency and risk management; and the disciplined pursuit of strategic growth initiatives.

In addition, during the year Land O'Lakes improved its market position in key segments including branded butter, deli cheese, seed, crop protection products, young animal milk replacers, premium lifestyle feed and value-added livestock feed.

Land O'Lakes 2010 net sales totaled $11.1 billion, up 7 percent from 2009's $10.4 billion and the second-highest in company history. Net earnings of $178 million were down from 2009's record $209 million, but still Land O'Lakes second-highest performance ever.

Earnings for 2010 benefited from $6 million in unrealized hedging gains (as of Dec. 31, 2010), while 2009's net earnings were impacted by $37 million in unrealized hedging gains (as of year-end 2009). Company officials noted that unrealized hedging is more an indicator of market conditions at a given time than of performance.  

Total balance sheet debt, including capital leases, was $618 million at year-end, a $76 million (11 percent) reduction versus Dec. 31, 2009.  The company also improved its Long-Term Debt-to-Capital ratio, which was 32.5 percent as of Dec. 31, 2010, compared to 33.7 percent as of Dec. 31, 2009.  

Land O'Lakes dairy foods business reported pretax earnings of $50.3 million for the year, compared to $61.0 million in pretax earnings for 2009. Dairy foods 2010 results include a $4.2 million unrealized hedging gain position as of Dec. 31, 2010, while 2009's results included $13.0 million in unrealized hedging gains.

While dairy foods volumes were mixed, margins were strong nearly across-the-board. Dairy foods sales for the year totaled $3.7 billion, compared to $3.2 billion in 2009. Notably, volume was up for the company's flagship branded butter despite a very price-conscious market – a reflection of the strength of the LAND O LAKES brand. Innovative products, like LAND O LAKES® Butter with Olive Oil, also performed well, and Land O'Lakes Foodservice business outperformed the industry (led by a significant increase in school segment volume). Although volumes were down in the Consumer Cheese category, Land O'Lakes built on its leading position in Deli Cheese.