Dairy Farmers of America, Inc. reported its 2007 financial results at its 10th Annual Meeting in Kansas City, Mo. this week. DFA had a strong year financially with record revenues and operating income, but because of one-time, non-cash charges of $144.8 million, recorded a net loss of $109.3 million. The non-cash charges were a result of plant closures and the re-valuation of DFA’s past investments.
“DFA’s financial outlook has never been better,” says Tom Camerlo, of Florence, Colo., chairman of DFA’s Board of Directors. “We had record revenues and strong profits in most of our businesses. The non-cash charges will not affect our continuing operations, cash flow or member milk checks.”
Driven by record-high milk prices, DFA had record revenues of $11.1 billion in 2007, up $3.6 billion from 2006. DFA members received an average pay price of $19.38 per hundredweight, up $6.30 from 2006 — a nearly 50-percent increase. DFA marketed a record 61.9 billion pounds of milk in 2007, and continues to grow its international business, increasing export sales to $211.4 million in 2007.
Operating income from DFA’s Dairy Food Products Group was very strong in 2007. Within Dairy Food Products, both Formulated Dairy Food Products and Keller’s Creamery butter divisions had record earnings. In its foodservice cheese businesses, the Italian cheese division recorded very strong operating income, and the American cheese division improved from recent years. American Dairy Brands, the retail branded cheese division of DFA, had strong revenue and volume, though operating income was impacted by rising cheese markets.
Focused on improved profitability and long-term growth, DFA closed two cheese plants in 2007 resulting in one-time, non-cash charges. Closing these plants – located in Lovington, N.M., and Corona, Calif. – will improve DFA’s profitability, officials say.
Record milk prices also negatively impacted a number of DFA’s fluid milk joint ventures. The businesses were not always able to pass higher milk costs to the marketplace, resulting in reduced profits, and in some cases devaluation of assets.
Over the past 18 months, the Board of Directors and management team have made a number of strategic business decisions to strengthen and grow DFA’s financial position, says Camerlo. “Our cash flow has never been stronger, we have a great relationship with the banking community and continue to make tremendous progress in improving our cooperative.”
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Dairy Farmers of America, Inc.