Aided by increased Dairy Foods Division sales, Land O'Lakes, Inc. reported record sales and cash returned to members in 2014.
Land O'Lakes, a member-owned cooperative with corporate headquarters in Arden Hills, Minn., reported net earnings of $266 million on record sales of $15 billion, with a record $184 million in cash returned to members.
“Our 2014 results reflect record annual revenues, continuing nearly a decade of consistent growth and increasing returns for our member-owners,” said Chris Policinski, president and CEO of Land O’Lakes, Inc. “Our continuing strong performance, together with our value-added, branded focus in businesses which extend from the farm to market – Winfield crop inputs, Purina animal feed and Land O’Lakes consumer foods – positions us to successfully compete in a growing food and agriculture marketplace. From international partnerships to innovative products and services designed to improve on-farm productivity, we’re leveraging our broad portfolio and perspectives to help farmers more productively and sustainably feed the world.”
At $266 million, net earnings were down from $306 million the previous year. These results reflect $18 million in pretax restructure and impairment charges related to a facility closure in Denmark, Wis., and other organizational restructuring. At $184 million, cash returned to members represented a 25% increase compared to the previous year. This is the sixth consecutive year cash returned to members has exceeded $100 million, bringing the nine-year total to more than $1 billion.
By Land O’Lakes business segment:
· Dairy Foods reported sales of $5.1 billion, a 13.3% increase year-over-year. Pretax earnings for Dairy Foods totaled $40 million, down from $75 million in 2013. Dairy Foods earnings reflect a one-time charge associated with the closure of the Denmark, Wis., dairy facility, and a sharp devaluation in global dairy powder markets. Dairy Foods results were driven by strong volumes, particularly in the butter, refrigerated desserts and food service categories. Branded butter volumes increased 9% in 2014 compared to the previous year, reflecting the strength of the LAND O LAKES brand in the resurging butter segment. Kozy Shack refrigerated desserts volumes were up 6 percent.
· Crop Inputs reported sales of $4.9 billion, up from the previous year. Pretax earnings totaled $220 million, up $2 million compared to the previous year. These results continue a multi-year trend of growth, driven by the market strength of the WinField brand and successful pursuit of new opportunities in rapidly growing agribusiness segments that focus on productivity, sustainability and new technologies in precision agriculture. Corn volumes were down 3 percent as planted acres decreased due to declines in corn prices. Soybean volumes increased 24 percent in 2014 compared to the previous year. Alfalfa volumes increased 1 percent year over year.
· Feed reported sales of $4.7 billion, down slightly from $4.8 billion in 2013. Pretax earnings of $27.8 million increased 58% compared to the previous year. These results were driven by increased demand for products in the core livestock and lifestyle segments and the successful marketing of the Purina Animal Nutrition Center, located in Gray Summit, Mo. Livestock feed sales increased 6%, and Lifestyle product sales increased 2% year-over-year. In its first full year of operation, the new Purina Animal Nutrition Center generated $5MM of incremental gross margin, more than triple the gross margin generated in 2012, the last full year prior to the remodeling investment.
During 2014, Land O'Lakes continued to implement previously announced plans to divest of its commodity egg business, operated through Moark, LLC. During the year, the company sold substantially all of the Western and Midwestern assets of this business for $166 million, a profit of $6 million. Land O’Lakes, Inc. continues to evaluate options with respect to the remaining commodity egg assets in the Eastern United States.
Total Land O'Lakes debt as of Dec. 31, 2014 was $1.14 billion, down $57 million from 2013. The decrease was primarily due to Moark asset sales and debt repayment. The company also ended the year with $592 million in cash and marketable securities.
The complete 2014 Land O'Lakes, Inc. Annual Report and related financial information is available at the “Investors” tab on the Land O’Lakes website: www.landolakesinc.com