One of America's top agricultural co-operatives, Land O'Lakes, has reported a record profit of $241 million with $113m of this being returned to members.
In its 2012 financial results, the US's third largest co-operative, recorded sales of $14.1 billion up from $12.8bn in 2011, which continue a trend of strong performance — each of the past six years have represented year-on-year growth. During the same time, the co-operative returned more than a half billion dollars to members. For the past four years the member's dividend has exceeded $100m. Net earnings for 2012 totaled $241 million, a 31 per cent increase from 2011's $184 million.
Chris Policinski, President and CEO of Land O'Lakes, said: "This consistent, positive performance is a direct result of the continuing implementation of strategies designed to build our value-added, branded businesses in Dairy Foods, Feed and Crop Inputs. These are strong, growing segments of agribusiness."
A variety of factors influenced the 2012 performance. Among the factors were warmer-than-normal weather, which benefitted the Crop Inputs business, volatile dairy markets, and fluctuations in commodity pricing. Overall, Land O'Lakes' results were positively impacted by the continuing implementation of strategies focused on consolidating and strengthening the company's business platform, reducing costs and driving growth, according to Mr Policinski.
"Our growth strategy is fueled by the generation of cost savings and the enhancement of revenues in our businesses through a program we call Total Margin Management. We use these funds to reinvest in product innovations and building our industry-leading brands," he continued. "We also completed several key acquisitions in 2012. This requires a financial strategy that balances short-term earnings and returns with long-term investment to achieve even greater future rewards."
Dairy Foods achieved strong results in 2012 despite significant challenges in the first half of the year caused by unexpected and exceptional growth in milk supplies and volatile markets. Net sales were $4.2 billion, down four per cent from 2011, while pretax profits improved to $38 million, a 34 per cent increase from the prior year.
Dairy Foods also grew through significant new acquisitions in 2012, including that of Kozy Shack Enterprises, Inc., adding this leading brand of refrigerated desserts to its product offerings. Dairy Foods also benefited from its 50 per cent ownership in Eggland's Best.
Strong results were also achieved in the Business-to-Business segment of Dairy Foods, specifically Foodservice, which provides products to schools, full-service restaurants, and government organizations. The Industrial Foods business was negatively impacted by unexpected milk volume in the first half of the year plus commodity price impacts on cheese and whey. Despite these adverse market conditions, Land O'Lakes continued to expand its relationships with large, global customers.
Purina Animal Nutrition delivered very good performance in 2012. Results were driven by strong margins throughout its portfolio plus the launch of a major new branding platform, new product lines and a key acquisition. Net sales were $4.6 billion, 15 per cent more than last year while pretax earnings for the year totaled $31 million, 63 per cent favourable to 2011.
Purina achieved significant margin improvement gains in the Lifestyle and Livestock businesses through improved product mix, focused pricing actions and successful risk management. The 2012 results were also favorably influenced by strong protein margins in the ingredients business and by the successful acquisition of Old Mill Troy in the premix business.
In crops, Winfield Solutions delivered record results in 2012 bolstered by a new branding strategy, continuing innovation and warmer-than-normal weather conditions that drove demand for WinField's products and services to new highs. Net sales for 2012 totaled $4.7 billion, 18 per cent higher than the prior year. Pretax earnings for the year were $228 million, 62 per cent more than 2011.
The egg layers sector, conducted through Moark, experienced a challenging year with unfavorable results driven primarily by high feed costs and lower commodity and brown egg pricing. Losses for the Layers segment totaled $34 million in 2012 compared with a loss of $3 million in 2011. Net sales achieved a new record of $735 million, 23 per cent more than 2011.