Land O'Lakes Inc., Arden Hills, Minn., said its 2010 financial results included the company's second-highest net earnings and sales as well as record-high cash returned to members ($125 million).  Net earnings were $178 million, down from 2009's $209 million, but the second-highest in Land O'Lakes history. Net sales rose 7% to $11.1 billion from $10.4 billion in 2009 and also were the company's second-highest net sales 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.

 

The company ranks 8th on the 2010 Dairy 100, Dairy Foods’ list of the largest dairy processors.

Chris Policinski, Land O'Lakes president and chief executive officer, 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. 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.

Dairy Foods
The 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.

Feed business
The company's Feed business reported $22.1 million in 2010 pretax earnings, compared to $29.8 million in 2009.  Feed results for 2010 include a $2.6 million unrealized hedging gain, compared to an $18.4 million unrealized hedging gain as of Dec. 31, 2009.  Earnings for 2010 also include a $14 million asset-sale gain. Feed sales for 2010 were $3.3 billion, down slightly from $3.4 billion in 2008. 

Layers/Eggs
The company's Layers/Eggs business, MoArk, LLC, reported a $27.2 million pretax loss for 2010, compared to a $2.8 million pretax loss one year ago.  Earnings for 2010 include the impact of a $27 million legal charge, while 2009 earnings include a $12 million asset-sale gain.  Without those one-time items, 2010 operating results would be improved over 2009.  Unrealized hedging impacts in this business were not significant. The company reported 2010 sales of $510 million in the shell eggs business, compared to $523 million in 2009 sales.  While overall volume was down, volume was up in higher-value branded and specialty eggs, led by Land O Lakes branded eggs.

Crop Inputs
In 2010, the company's Crop Inputs business – Winfield Solutions, LLC – reported $144.8 million in pretax earnings, versus $136.8 million in pretax earnings for 2009.  Results for Crop Inputs in 2010 include a $1.9 million unrealized hedging loss, while 2009 results include an unrealized hedging gain of $11.1 million. Crop Input sales for 2010 were $3.7 billion, versus sales of $3.3 billion in 2009, despite overall devaluation in the category.  Volumes were strong across-the-board, with an increase in Crop Protection Products, as well as nearly all Seed categories.